A Radio Manufacturer Is Experiencing Theft Problems at Its Warehouse

question 77

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 minimize the net cost of warehouse thefts.

$\begin{array}{ll} \text { Number of}& \text {Number of Radios }\\ \text { Security Guards}& \text { Stolen Per Week}\\0 & 50 \\1 & 30 \\2 & 20 \\3 &14 \\4 & 8 \\5 & 6 \\\end{array}$
-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.