A Manager Cares About the Number of Workers Under Her

question 41

Multiple Choice

A manager cares about the number of workers under her command. She can choose between two projects: Project A allows her to hire workers who must be paid W_A each, Project B allows her to hire workers who must be paid W_B each. She is allocated a budget of $100 that she can allocate to either project. Which of the following accurately represents the manager's problem?

• A) The objective function is Max (N_A+N_B), where N_i is the number of workers on project i (i = A, B); the constraint is W_AN_A + W_BN_B ≤ $100, where W_i is the wage on project i (i = A, B).
• B) The objective function is Max (N), where N is the number of workers under the manager's control; the constraint is W_A + W_B ≤ $100, where W_i is the wage on project i (i = A, B).
• C) The objective function is Max (W_AN + W_BN), where N is the number of workers and W_i is the wage of the worker on project i (i = A, B); the constraint is W_A + W_B ≤ $100.
• D) Max (B/N), where B is the manager's budget and N is the number of workers under the manager's command; the constraint is W_AN + W_BN ≤ $100.

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Definitions:

Subordinated Debt

A type of loan ranked below other loans with respect to claims on assets or earnings in the event of a liquidation or bankruptcy.

Appreciation

An increase in the value of an asset over time, often due to changes in market demand or supply, inflation, or other economic factors.

Market Yield

The interest rate that investors demand for buying securities currently available in the market.

Semiannually

Pertains to an event or action occurring twice a year, typically every six months.