Suppose That the Marginal Benefit of Having a Security Guard

question 26

Multiple Choice

Suppose that the marginal benefit of having a security guard at the airport is MB₁,at the bank is MB₂,and at the mall is MB₃.The marginal cost of assigning security guard is the same for all three places,and it is represented by MC₂.
The marginal cost curves are upward-sloping because the first guards assigned are the guards with the lowest opportunity costs for performing this task.This is referred to as the

• A)law of demand.
• B)law of supply.
• C)law of diminishing marginal utility.
• D)low-hanging-fruit principle.

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Definitions:

Break-Even

A financial situation in a business where the income equals the costs, leading to neither profit nor loss.

Monthly

Pertaining to something that occurs, is calculated, or reported every month.

Variable Expense

An expense that changes in proportion to production output or sales.

Target Profit

The amount of net income a company aims to achieve for a specific period by setting certain sales targets and cost controls.