Four Stores Have a Problem with Theft and Security Is

question 35

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 - 2S.Patrols cost $20 per hour.What is the socially efficient level of security?

• A) 90 person-hours of patrols per week
• B) 100 person-hours of patrols per week
• C) 92.5 person-hours of patrols per week
• D) 97.5 person-hours of patrols per week

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Definitions:

Dominant Strategy

A course of action that results in the highest benefit for a player, regardless of what the other players do.

Wealth

A plentiful supply of valuable goods or property, or the dominion over these assets.

Benefit

The advantage or profit gained from something.

Nash Equilibrium

A condition in strategic games, indicating that each participant's chosen strategy maximizes their payoff, given the strategies selected by others.