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Stan, a Soybean Farmer, Acts to Prevent Crop Failure

question 3

Multiple Choice

Stan, a soybean farmer, acts to prevent crop failure. The marginal benefit is represented by MB = 80 - A, where A is the number of precautions. The marginal cost of these precautions (e.g., soil preparation and pesticide and fertilizer use) is MC = 20 - 0.5A. Suppose the government offers Stan crop insurance, which changes the marginal benefit of taking precautions to MB = 65 - 2A. The number of precautions Stan takes _____ from _____ without insurance to _____ with insurance.


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