I am still a bit confuse with the Production Concept. Can you further
explain to me with these examples? 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 marginal product." Is this statement correct? If so, why? If not, explain why not. 2. After two quarters of increasing levels of production, the CEO of a metal industry was upset to learn that, during this time of expansion, productivity of the newly hired sheet metal workers declined with each new worker hired. Believing that the new workers were either lazy or ineffectively supervised (or possibly both), the CEO instructed the shop foreman to "crack down" on the new workers to bring their productivity levels up. Explain carefully in terms of production theory why it might be that no amount of "cracking down" can increase worker productivity. Provide an alternative to cracking down as a means of increasing the productivity of the sheet metal workers. 3. BusinessWeek, in an article dealing with management, wrote, "When he took over the furniture factory three years ago . . . [the manager] realized almost immediately that it was throwing away at least $100,000 a year worth of wood scrap. Within a few weeks, he set up a task force of managers and workers to deal with the problem. And within a few months, they reduced the amount of scrap to $7,000 worth [per year]." Was this necessarily an economically efficient move?
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