A problem on managerial economics?

Question

a managerial economist has to decide whether to manufacture a machine or outsource it fron outside.

wt decision he shouls make considering factors like oppurtunity cost,incremental cost and risk??

Answer 1

There is not fixed rules to help to take this decision because the company can have many goals, the theory of economics sustain all the companies are looking for only maximize profits then the principles in economics can be followed keeping in mind this.

Not all outsourcing give less cost, usually is an option when the law context of the economic decision could be complicated; when there is problem for financing internal project or it have not the knowledge or know how to let develop an important project go to outsourcing is an alternative.

If the company develop many projects or manufacture many goods, it can select less important or less aggregate value project or process and give it to outsourcing. When an outsourcing have reached a high level of knowledge and know how could be a good idea to use it to catch some talents or for the own employees get those knowledge...

Answer 2

You haven't provided enough information for anyone to make a decision.