Imagine that you are a business owner. Choose whether to hire a new person in the marketing department or upgrade your computer system. Each choice requires the same amount of investment. Address the following topics: What factors do you use to determine whether to invest in the additional capital and labor?
I would invest in upgrading the computer system. Newer technology can increase productivity and efficiency.
To make its decision, a business has to consider how the size of the work force affects the amount of output produced, or the production function. As the number of workers increase, the marginal product declines. If the value of the marginal product is less than an additional employee's wage, the employee is unprofitable.
New technology advance typically raises the marginal...
Excerpt from file: Imaginethatyouareabusinessowner.Choosewhethertohireanewpersoninthemarketing departmentorupgradeyourcomputersystem.Eachchoicerequiresthesameamountof investment.Addressthefollowingtopics:Whatfactorsdoyouusetodeterminewhetherto investintheadditionalcapitalandlabor?
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