Four Stores Have a Problem with Theft and Security Is

question 55

Multiple Choice

Four stores have a problem with theft and security is a public good.Let S stand for the number of person-hours of security patrols per week.The marginal benefit of security patrols to each of the stores is given by the formula MB = 200/(1 + S) .Patrols cost $25 per hour.Which of the following gives the marginal social benefit function?

• A) MSB = 50/(1 + S)
• B) MSB = 4 + [200/(1 + S)]
• C) MSB = 800/(1 + S)
• D) MSB = [200/(1 + S)] - 4

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Definitions:

Contract Curve

In economics, a curve that represents the set of optimal allocations of resources or goods for which both parties can be no better off with any other division.

Efficient Allocations

The process of distributing resources in a way that optimally utilizes them to achieve maximum productivity and utility without any wastage.

Federal Gasoline Tax

A tax imposed by the federal government on the sale of gasoline, used primarily to fund transportation infrastructure projects like highways and bridges.

Substitutes

Products or services that can replace each other in use, such that an increase in the price of one leads to an increase in the demand for the other.