Suppose That the Marginal Benefit of Having a Security Guard

question 120

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.
Suppose all three locations hire the efficient number of guards,and that the marginal cost of having a security guard equals his or her wage.Efficiency would also require that

• A) all security guards be paid the same wage regardless of where they work.
• B) more security guards be hired at the location at which marginal cost is lowest.
• C) more security guards would be hired at the location at which marginal cost is greatest.
• D) security guards at the airport be subsidized because private markets will under-provide them.

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Definitions:

Indifference Curve

A graph representing combinations of two goods that give the consumer equal satisfaction and utility, illustrating preferences.

Price Decrease

A reduction in the cost of a good or service, which can influence consumer demand and economic dynamics.

Indifference Curves

Graphical representations of different bundles of goods that provide the same level of utility or satisfaction to a consumer.

Optimal Consumption

A situation in consumer behavior where the combination of goods and services purchased maximizes utility for the consumer, given their budget constraints.