The company that you manage has already spent $5 million on developing a new product – a website that combines You Tube, Twitter, and Facebook – called You Twit Face. The development is not quite finished. It will cost an extra $3 million to finish development and complete the product. At a recent meeting, your salespeople report that the expected sales of your new product (if you finish) are $7 million total. If you do not finish developing the product you can sell the incomplete product to another company for $2 million. What is the MC of finishing the development? __________________ What is the MB of finishing the development? __________________ Should you finish the product? Why or why not? Use the idea of “thinking at the margin” to explain your answer.
2. The company that you manage has already spent $5 million on developing a new product – a website that combines You Tube, Twitter, and Facebook – called You Twit Face. The development is not quite finished. It will cost an extra $3 million to finish development and complete the product. At a recent meeting, your salespeople report that the expected sales of your new product (if you finish) are $7 million total. If you do not finish developing the product you can sell the incomplete product to another company for $2 million. What is the MC of finishing the development? __________________ What is the MB of finishing the development? __________________ Should you finish the product? Why or why not? Use the idea of “thinking at the margin” to explain your answer.
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