This table reflects the monthly total benefits and costs of hiring security guar

Question

This table reflects the monthly total benefits and costs of hiring security guards at a large department store. Total benefits are measured in terms of the value of theft deterred, and total costs are determined by the $2,400 monthly wage paid to each guard Total Number of Guards Total Cost Total Benefit $4,300 $7,100 $9,000 $10,000 $2,400 $4,800 $7,200 $9,600 True or False: The department store should optimally hire four guards because that results in the largest value of theft deterred. 3.1. O True O False

Explanation / Answer

False.

It is correct that hiring 4 guards will avoid theft of $10,000 value but the cost of hiring 4 guards is $9600.
This gives a total benefit of only $400. Here we should look at marginal benefits.
The marginal benefit of hiring guards is $1900 for the 1st, $2300 for 2nd, $1800 for 3rd and $400 for the 4th.
So, the marginal benefit is highest if the store employs 2 security guards.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.