Refer to the Information Given in Table 16 -Refer to Table 16

question 114

Multiple Choice

Refer to the information given in Table 16.8 below to answer the question that follows.
Table 16.8
$$\begin{array} { c c c } \begin{array} { c } \text { Number of } \\\text { Police Officers }\end{array} & \begin{array} { c } \text { Tim's } \\\text { Willingness to Pay }\end{array} & \begin{array} { c } \text { Al's } \\\text { Willingness to Pay }\end{array} \\\hline 1 & \$ 200 & \$ 120 \\\hline 2 & 160 & 40 \\\hline 3 & 100 & 20 \\\hline\end{array}$$
-Refer to Table 16.8. Assume that the marginal cost of hiring a police officer is $120. If A and B are the only two people in the society, the optimal number of police officers is

• A) 1.
• B) 2.
• C) 3.
• D) indeterminate from this information.

Analyze how changes in price influence consumer behavior through the substitution and income effects.

Understand the concept of market demand and how individual demands aggregate to market demand.

Recognize the difference between normal goods and inferior goods and how income changes affect their demand.

Understand the impact of expectations on consumer demand.

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