Marginal Returns and Free Is Not Free

938 words 4 pages
After two quarters of increasing levels of production, the CEO of Canadian Fabrication & Design 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 inefficiently 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 at CF&D.
◦ Provide an alternative to cracking down as a means of increasing the productivity of the sheet metal workers. Fully explain your
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I have less money – that is totally illogical. I laugh every time. “Saved.” What a farce.

Coincidentally, as I began this homework assignment, my son brought in the mail. There was a brochure: “Free Home Security System…. An $850 Value…..” Hunting for the small print – which I barely can read it says: $99 Customer Installation charge (a sunk cost); a 36 Month agreement at $35.99 (plus tax) is $1295.64 + tax here of 6.75% comes to $1302.4 for only the monthly fee. Total thus far = $1401.4 total economic cost. WOW is that a value? “Free” market supplied resources are going to cost me $1401.4 explicit cost. Continue to read more of the small print and there are fees to upgrade the window coverage, motion detector systems, control panels, battery packs, and interior sirens, additional market-supplied resources, which I hire, rented, leased or purchase. SO actually an implied value as advertised at $850 is costing me $1401.4 for only 36 months (the installation of $99.00 becomes a sunk cost) – then who knows what the monthly cost would be.

My son says, “Wow Mom, think of all the money the dogs have saved us.” (These must be my implicit cost of having a personal security force). Although I think my son learned that statement from Harris Teeter…. The dogs… sunk costs. I assume the


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