A Radio Manufacturer Is Experiencing Theft Problems at Its Warehouse

question 36

Multiple Choice

A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts.The firm wants to maximize the net benefit of warehouse security guards. $\begin{array}{c}\begin{array}{c}\text {Number of}\\\text { Security Guards}\\0\\1\\2\\3\\4\\5\\\end{array}\begin{array}{c}\text {Number of Radios}\\\text { Stolen Per Week }\\50\\30\\20\\14\\8\\6\\\end{array}\end{array}$
Given the above info,in order to minimize the NET cost of theft,a firm should choose the level of theft prevention at which

• A)theft is eliminated.
• B)the marginal benefit of theft equals the marginal cost of the theft.
• C)the total benefit of theft prevention equals the total cost of the theft prevention.
• D)the marginal benefit of theft prevention equals the marginal cost of preventing theft.
• E)the total cost of theft prevention equals the total cost of preventing theft.

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Definitions:

Shift of Supply

A change in the quantity of a good that suppliers are willing and able to sell in the market at any given price, often due to changes in production costs or technology.

Heating Oil

A low viscosity, liquid petroleum product used as a fuel oil for furnaces or boilers in buildings. It is a major component in home heating solutions in colder regions.

Quantity Supplied

The amount of a commodity that producers are willing to sell at a particular price over a given period of time.

Supply

The total amount of a product or service that is available to consumers at a given price level.