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    diminishing marginal productivity

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    1. How can you use the concept of "diminishing marginal productivity" in your staffing decisions in your company's operations?
    2. Marginal productivity can be divided into three ranges: a) Increasing marginal productivity; b) Diminishing marginal productivity; and c) Negative marginal productivity. Often the range of increasing marginal productivity is described as the range of synergy. What does this mean? Provide an example.
    3. Marginal productivity can be divided into three ranges: a) Increasing marginal productivity; b) Diminishing marginal productivity; and c) Negative marginal productivity. Firms are usually in the range of diminishing marginal productivity and that is not a bad thing! What does this mean? Provide an example.
    4. What intangible costs and benefits should also be included in our economic decision making relative to staying in a job or finding a new job?
    5. Why might a business owner work late and long for meager "returns" and ignore the advice when normal profits are not being earned, one should exit the business?

    6. What part of the production process is outsourced to foreign operations for the iPod? 8.In what industries do we see this innovation cycle and in what industries don't we see this innovation cycle? Why?

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    Solution Preview

    Hope this will help. Thanks

    1. How can you use the concept of "diminishing marginal productivity" in your staffing decisions in your company's operations?
    As we hire more people to share the same capital resources (such as same office space, same computing infrastructure, same applications), the load on these capital resources increases and hence the productivity of the additional person hired decreases. For example, if we have one Bloomberg terminal in our premises to extract data, as we hire more and more associates, the queue at the Bloomberg terminal will lengthen which in turn will decrease the productivity of the additional associate. Hence, while hiring additional associate we need to consider whether the marginal productivity (which is decreasing) is good enough to justify the wages of the associate. Instead should I investment more money to make the systems more efficient or install another Bloomberg terminal.

    2. Marginal productivity can be divided into three ranges: a) Increasing marginal productivity; b) Diminishing marginal productivity; and c) Negative marginal productivity. Often the range of increasing marginal productivity is described as the range of synergy. What does this mean? Provide an example.
    The range where increasing marginal productivity is achieved is described as range of synergy because an additional ...

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    This posting examines diminishing marginal productivity.

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