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.If each store provided security independently,how much would each store provide?
A) 90 person-hours of patrols per week
B) 100 person-hours of patrols per week
C) 92.5 person-hours of patrols per week
D) 97.5 person-hours of patrols per week

Question

Quizplus · Accepted Answer

Each store will provide security until their marginal benefit equals the marginal cost. Setting MB = 200 - 2S equal to the cost per hour ($20), we get 200 - 2S = 20, solving for S gives S = 90.

Four Stores Have a Problem with Theft and Security Is