A manager in charge of new product development can hire engineers and market researchers.The annual salary of an engineer is $40,000,while a market researcher receives $20,000.The marginal contributions of engineers and market researchers are: Based on the above information,how should the manager with an annual budget of $160,000,allocate this budget in order to maximize the number of new products developed?
A)Hire 2 engineers and 1 market researcher.
B)Hire 3 engineers and 2 market researchers.
C)Hire 4 engineers and 3 market researchers.
D)Hire 4 engineers and 1 market researcher.

Question

A manager in charge of new product development can hire engineers and market researchers.The annual salary of an engineer is $40,000,while a market researcher receives $20,000.The marginal contributions of engineers and market researchers are:  Based on the above information,how should the manager with an annual budget of $160,000,allocate this budget in order to maximize the number of new products developed?
A)Hire 2 engineers and 1 market researcher. 
B)Hire 3 engineers and 2 market researchers. 
C)Hire 4 engineers and 3 market researchers. 
D)Hire 4 engineers and 1 market researcher.

Quizplus · Accepted Answer

In order to maximize the number of new products developed, the manager should consider the marginal contributions of each engineer and market researcher. Assuming that the marginal contributions are equal to their salaries, the total budget of $160,000 can be allocated as follows:

3 engineers x $40,000 = $120,000 
2 market researchers x $20,000 = $40,000

This allocation fully utilizes the budget and maximizes the number of employees hired, resulting in a total of 5 employees. Choice B fulfills these conditions and is the best option.

A Manager in Charge of New Product Development Can Hire