A Radio Manufacturer Is Experiencing Theft Problems at Its Warehouse

question 73

Multiple Choice

A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts.The firm wants to minimize the net cost of warehouse thefts. Given the above info,in order to minimize the NET cost of theft,a firm should choose the level of theft prevention at which

• A)theft is eliminated.
• B)the marginal benefit of theft equals the marginal cost of the theft.
• C)the total benefit of theft prevention equals the total cost of the theft prevention.
• D)the marginal benefit of theft prevention equals the marginal cost of preventing theft.
• E)the total cost of theft prevention equals the total cost of preventing theft.

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Definitions:

Income

Money received, especially on a regular basis, by an individual or business in exchange for providing labor, goods, or services, or through investing.

MPC (Marginal Propensity to Consume)

The proportion of an increase in income that is spent on consumption rather than being saved.

Government Purchases Multiplier

The ratio of change in aggregate economic output to a change in government spending, used to analyze the effect of fiscal policy on the economy.

Aggregate Demand

Total economic need for all goods and services within an economy, pegged at a designated price level during a chosen period.