Ashford BUS 640 Final week questions

Applied Problems 4

Complete the following problems from your text:

Chapter 8: Applied Problem 2

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

Chapter 9: Applied Problems 2 and 4  

Show work and explain your analysis. Submit your answers to the instructor.

2) The largo publishing house uses 400 printers and 200 printing presses to produce books. A printer’s wage rate is $20, and the price of the printing press is $5,000. The last printer added 20 books to the total output, while the last press added 1,000 books to the output. Is the publishing house making the optimal input choice? If not how should the manager adjust input usage?

2a. If not, how should the manager of Largo Publishing House adjust input usage?

Applied Problem

The MorTex Company assembles garments entirely by hand even though a textile machine exists that can assemble garments faster than a human can.

Workers cost $50 per day, and each additional laborer can produce 200 more units per day (ie. marginal product is constant and equal to 200).  

Installation of the first textile machine on the assembly line will increase output by 1800 units daily. Currently the firm assembles 5400 units per day.

a). The financial analysis department at MorTex estimates that the price of a textile machine is $600 per day. Can management reduce the cost of assembling 5400 units per day by purchasing a textile machine and using less labor? why or why not?

b) The Textile Workers of America is planning to strike for higher wages.  Management predicts that if the strike is successful, the cost of labor will increase to $100 per day. If the strike is successful, how would this affect the decision in part a to purchase a textile machine"