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    Hiring a new worker and diminishing returns

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    At a management luncheon, two managers were overheard arguing about the following statement: "A manager should never hire another worker if the new person causes diminishing returns." Is this statement correct? If so, why? If not, explain why not.

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    Solution Preview

    It is a correct statement up to a certain point. If hiring a new worker causes profits to go down due to the fact that the new worker's salary exceeds the profit increase from increased ...

    Solution Summary

    The expert examines hiring a new worker and diminishing returns.