The general manager of a Major League Baseball team reasons that hiring an all-star-caliber third baseman would allow the team to win 13 more games per season, generating more fan interest and higher ticket sales. The estimated increase in ticket and merchandise sales is $10.5 million per year, but it would cost the team $12 million a year to hire an all-star-caliber third baseman. Using marginal cost-benefit thinking, the general manager will not hire the all-star-caliber third baseman.

Question

Quizplus · Accepted Answer

The marginal cost of hiring the third baseman ($12 million) exceeds the marginal benefit from increased sales ($10.5 million), so the decision would not be economically justified.

The General Manager of a Major League Baseball Team Reasons