Suppose That the Marginal Benefit of Having a Security Camera

question 119

Multiple Choice

Suppose that the marginal benefit of having a security camera in the library is given by MB,at the supermarket is given by MB₁ and at the museum is given by MB₂.All values are per week.
Suppose cameras are currently allocated efficiently.Now suppose that a camera at the museum malfunctioned and it will take two weeks to replace it.Owners of the supermarket would

• A) be willing to rent the museum a camera for less than the value of the camera to the museum.
• B) not be willing to rent the museum a camera for less than the value of the camera to the museum,but managers at the library would.
• C) not be willing to rent the museum a camera for less than the value of the camera to the museum,and neither would managers at the library.
• D) exploit the situation by renting a camera to the museum for more than $U per week.

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Definitions:

Retirement Fund

A savings plan or account that is set aside for the purpose of supporting an individual financially during their retirement.

Deferred Annuity

An insurance product that delays payments of income, installments, or a lump sum until the investor elects to receive them.

Compounded Annually

Interest calculation where the interest is added to the principal sum so that the added interest also earns interest from then on, done once a year.

Compounded Monthly

A method of calculating interest where the accumulated interest is added to the principal sum each month, leading to an increase in the amount of future interest earned.