A Stand-Up Paddleboard Outfitter Operates Without Insurance

question 30

Multiple Choice

A stand-up paddleboard outfitter operates without insurance. The outfitter's marginal cost of safety (e.g., staff training, rescue equipment) is MC_A = 100 + 14A, where A is the number of safety actions taken. The marginal benefit of those actions is given by MB_B = 200 - 6A. The government has mandated that all SUP outfitters carry insurance, leading to a change in the outfitter's marginal benefit curve to MB_B = 140 - 6A. The optimal number of precautions taken by the outfitter is ____.

• A) 100
• B) 14
• C) 5
• D) 2

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