Situation 33-1 Suppose That the Equation That Represents the Expected

question 43

Multiple Choice

Situation 33-1 Suppose that the equation that represents the expected benefits of burglary for a given prospective criminal is as follows:
EB = Ps x Loot
The criminal's cost equation is as follows:
EC = [Pp x (I + F) ] +  AC
Where:
EB is the expected benefits of burglary
Ps is the probability of successfully burglarizing a house
Loot is the dollar take from the burglary  
EC is the expected costs of burglary
Pp is the probability of imprisonment
I is the income the criminal gives up if caught and imprisoned
F is the dollar value the criminal puts on freedom
AC is the anguish cost of committing a burglary
Refer to Situation 33-1.  If the prospective criminal sets the following values:
Ps = 65 percent
Loot = $20,000
Pp = 20 percent
I = $30,000
F = $15,000
AC = $5,000
The prospective criminal's expected benefit from committing the burglary is ______________ and his expected cost of committing the burglary is _______________.  Economic theory tells us that under these circumstances, the prospective criminal ______________ commit the burglary.

• A)$13,000; $14,000; will
• B)$13,000; $14,000; will not
• C)$6,667; $50,000; will not
• D)$57,500; $50,000; will

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Definitions:

Head

The uppermost part of the human body or the leading or directing part of an organization, state, etc.

Wages

Compensation or remuneration paid by an employer to an employee in exchange for work or services rendered.

19th Century

The period from January 1, 1801, through December 31, 1900, marked by industrial, cultural, and political changes worldwide.

Inflation

The economic condition characterized by an increase in prices and fall in the purchasing value of money.