Purchase Solution

Managerial Decision Based on Marginal Benefit

Not what you're looking for?

Ask Custom Question

A copy company wants to expand production. It currently has 20 workers who share eight copiers. Two months ago, the firm added two copiers, and output increased by 100,000 pages per day. One month ago, they added five workers, and productivity also increased by 50,000 pages per day. Copiers cost about twice as much as workers. Would you recommend they buy another copier or hire another worker?

Purchase this Solution
Solution Summary

This solution shows how to use marginal analysis to decide whether a printing company should hire more workers or buy more copiers.

Solution Preview

The marginal benefit of workers, i.e. the increased production resulting from adding one more worker, is 10,000 pages per day. The ...

Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • Managerial Economics

    MARGINAL ANALYSIS. Retrieved on October 4, 2005 from: http://sorrel.humboldt.edu/~economic/econ104/marginal/ 4. Decision Making Using Marginal Analysis.

  • Analyze Cost and Role in Decision Making

    An example of this is capital investment decision on production expansion. This project would require that marginal or incremental costs must be compensated by marginal or additional benefit.

  • Opportunity cost, marginal cost, relevant cost

    Considering only those that are relevant to the decision will make the decision making process simpler. Relationship between marginal benefit and marginal costs. How is marginal benefit measured and how it relates to marginal costs?

  • Managerial Decisions

    Make a Managerial Decision Describe in economic terms a managerial decision....Should our company hire temporary workers or hire new workers to handle increase demand for our product?

  • Financial Decison Making

    The marginal cost of capital impacts the decision on whether to expand the division or not as it helps the manager identify what financing sources to prioritize.

  • Managerial economics for Anheuser Busch

    An important benefit that the merged company will have is that the company will be in a better position to examine the firm's capital purchasing decision.

  • Differential vs. financial analysis

    Differential analysis has also been called incremental or marginal analysis. It is used almost exclusively for managerial accounting, and not financial accounting.

  • Non-monetary information in an accounting report

    Management is better able to engage in decision-making based on the entirety of the report, because what the numbers alone report.

  • Using the Time Value of Money to Make Managerial Decisions

    Based on research conducted by the marketing department, you estimate an increase in sales for your division of $150,000 per year the first 2 years and then $250,000 per year over the following 3 years.

  • Labor Productivity and Winner-Take-All Market

    You should make your argument based on the marginal principle. Firms are willing to pay for high price for productive labor as long as the marginal benefit of hiring that labor is higher than the marginal cost of hiring the labor.

View More Related Solutions