Suppose That the Marginal Benefit of Having a Security Guard

question 72

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.
Starting with MB₁ (marginal benefit curve for the airport) and MC₂,suppose the federal government decided to increase security at the airport.As a result training costs for security guards increases.This would shift ______ and ______ the optimal number of security guard at the airport.

• A)MC₂ to MC_3; increase
• B)MC₂ to MC_3; decrease
• C)MC₁ to MC_2; increase
• D)MC₂ to MC_1; increase

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Definitions:

Compounded Semi-Annually

Interest that is calculated and added to the principal twice a year, resulting in increased interest earnings due to the compound effect.

Savings

Money that has been set aside and saved, typically in a bank account, for future use or emergencies.

Account

A record summarizing all the transactions pertaining to a single item in the accounting equation.

Monthly

Occurring or being calculated on a monthly basis; often used in the context of payments, interest calculations, or reporting periods.