(Table: Security in a Residential Community) Use Table: Security in a Residential Community.Suppose that the residential community has 100 residents.The marginal cost of hiring the second security guard is _,and the marginal social benefit is _.

A) $150;$200
B) $450;$1,800
C) $150;$600
D) $450;$600

Question

(Table: Security in a Residential Community) Use Table: Security in a Residential Community.Suppose that the residential community has 100 residents.The marginal cost of hiring the second security guard is _____,and the marginal social benefit is _____.

A) $150;$200
B) $450;$1,800
C) $150;$600
D) $450;$600

Ashleigh Mizner · Accepted Answer

Final Answer : C, Explanation :  From the table, we can see that when there is only one security guard, the marginal social benefit is $750 and the marginal cost is $300. When a second security guard is hired, the marginal social benefit increases to $1,350 while the marginal cost increases to $450. Therefore, the marginal cost of hiring the second security guard is $150 ($450-$300) and the marginal social benefit is $600 ($1,350-$750). To determine if hiring the second security guard is optimal, we compare the marginal cost and marginal social benefit. Since the marginal social benefit ($600) is greater than the marginal cost ($150), it is optimal to hire the second security guard. Therefore, the best choice is to hire the second security guard and the answer is C.

(Table: Security in a Residential Community) Use Table: Security in a Residential Community.Suppose that the residential community has 100 residents.The marginal cost of hiring the second security guard is _,and the marginal social benefit is _.

A) $150;$200
B) $450;$1,800
C) $150;$600
D) $450;$600

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