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 MB = 200 - 2S.Patrols cost $20 per hour.Which of the following gives the marginal social benefit function?
A) MSB = 50 - 0.5S
B) MSB = 800 - 8S
C) MSB = 800 - 2S
D) MSB = 196 - 2S

Question

Quizplus · Accepted Answer

The marginal social benefit (MSB) is the sum of the marginal benefits (MB) of all four stores. Since each store has an MB = 200 - 2S, the total MSB for four stores is 4*(200 - 2S) = 800 - 8S.

Four Stores Have a Problem with Theft and Security Is