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Production and Cost in the Short Run

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Category: Economics > Microeconomics
Subject: Production and Cost in the Short Run
Details: 1) 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? In detail.
2) Explain why it would cost Pete Sampras or Venus Williams more to leave the pro tennis tour and open a tennis shop than it would cost a coach of a tennis team to do so.

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Solution Summary

Production and Costs in the Short Run are calculated.

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1) 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? In detail.
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<br>The statement is not correct. It is also profitable if the returns is diminishing, but still higher than the worker's wage. Because if the marginal product revenue (Price*Marginal Product) is higher ...

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