Four Stores Have a Problem with Theft and Security Is

question 4

Multiple Choice

Four stores have a problem with theft and security is a public good.Let S stand for the number of person-hours of security patrols per week.The marginal benefit of security patrols to each of the stores is given by the formula Patrols cost $25 per hour.What is the socially efficient level of security?

• A) 15 person-hours of patrols per week
• B) 7 person-hours of patrols per week
• C) 8 person-hours of patrols per week
• D) 16 person-hours of patrols per week

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by a company, such as rent or salaries.

CVP Income Statement

A financial report that analyzes the cost, volume, and profit relationships within a company, emphasizing how sales affect profits.

Variable

An element, feature, or factor that is liable to vary or change; in the context of finance and economics, it often refers to costs that fluctuate with the level of output or activity.

Fixed-Cost

Expenses that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.