Consider a Police Department Trying to Decide How to Allocate

question 53

Multiple Choice

Consider a police department trying to decide how to allocate its crime prevention resources between motor vehicle thefts and burglaries. The marginal benefit of one less motor vehicle theft is $20,000, and the marginal benefit of one less burglary is $1,000. Suppose the annual number of motor vehicle thefts and the annual number of burglaries depends on the number of detectives assigned to each type of crime, as shown in the table below. Each detective costs $35,000 each per year, regardless of whether the detective is assigned to motor vehicle thefts or burglaries. Suppose the police department hires 4 detectives and assigns all of them to motor vehicle theft. The marginal benefit of the fourth detective assigned to motor vehicle theft is ______, and the marginal benefit that would have been gained had the detective instead been assigned to burglary is ______.

• A)$20,000; $40,000
• B)$40,000; $40,000
• C)$20,000; $20,000
• D)$40,000; $20,000

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Definitions:

Liquidated Damages

are a predetermined amount of money agreed upon in a contract that one party will pay to the other in the event of a breach.

Liquidated Damages

A predetermined sum agreed upon by the parties to a contract to be paid as compensation in the event of a breach.

UCC

stands for the Uniform Commercial Code, a set of laws that provide legal standards and regulations for commercial transactions in the United States.

Non-breaching Seller

A seller who has complied with the terms of a contract and has not violated any conditions or obligations.