Should a manager hire another worker if the new person causes diminishing returns. Explain?
Answer:
When you hire an additional worker there is always a tendency for diminishing marginal returns. This doesn't mean that the additional worker looses you money, instead it is a theory that says for each additional worker hired the profit margin created by each worker gets lower.
i.e. Hiring two workers may produce an output of 25 units each at a profit of $2 per unit equaling $100. Hiring 10 workers may only produce 20 units each (because the first 2 were the most productive, and the last two the least productive) at a profit of $1.50 per unit giving you a total profit of $300.
Short answer- Yes, keep hiring workers until your marginal return reaches zero.
If someone hurts the company more than helps, why would you keep them around? Yes, they should replace them. It is their job as a manager to recognize and correct those situations either by counciling or by replacement.
That makes no economic sense because it would contribute to a lowering profit margin. If the manager wants to keep his job, the answer is: no.
It depends on whether his contribution would make you lose money or not. As long as the worker gives you positive profits, you should hire him.
According to economic theory, a firm hires resources that diminish returns because they still make profits from those resources (marginal revenue > marginal cost). The effect to the bottom line may be one of decreasing margins, but increasing the absolute amount of profits for the stockholders (the reason why companies are in business).
It is not about how profitable you are, it is about whether you can use the resources and still make a profit from them.
The answers post by the user, for information only, FunQA.com does not guarantee the right.
More Questions and Answers:
More Questions and Answers: