Question

Assume that you are the vice president of movie production for a major Hollywood studio. You need to compose a memo to your film's finance team justifying the hiring of scientists and mathematicians to act as consultants on your film. Use your answers from question 1 to write a brief summary of the memo. Ensure that you use the concepts of scarcity, opportunity cost, trade-off, monetary incentive, marginal benefit, and marginal cost appropriately.

Answer 1

Scientists and mathematicians would be greatly beneficial to the project due to their ability to help us calculate our cost and effect on the environment, as well as maximize our budget with their calculations. I hope you all realize how important these new additions to our team are.

Answer 2

Preproduction on our upcoming sci-fi film starts next week. I know that extra money in our budget is scarce. But we require a mathematician and a physicist to make our visual effects look more realistic. Our audience is smart. They can easily spot poor special effects. The marginal cost to acquire realistic animation and visual effects is far outweighed by the marginal benefit of making the film more entertaining and attracting a larger audience.

To accommodate the change in marginal cost that is due to the cost of consultants, we may have to make trade-offs with the production staff and extras. While I value the work done by the production staff and am reluctant to cut them, it may be necessary if we can’t find another way to pay for the consultants. The consultants are critical to our success in the industry, so unfortunately, letting go some of our production staff must be our opportunity cost to make sure our movies are realistic. I know it seems a little harsh to take this step. But substituting consultants for production staff will ensure higher returns at the box office. It will also increase our chances of winning awards for visual effects. Higher returns will ensure that our employees and stockholders are satisfied, since they seek monetary incentives, and the visual effects awards will increase our reputation in the industry, a nonmonetary incentive that is just as important.