Situation 33-1 Suppose that the equation that represents the expected benefits of burglary for a given prospective criminal is as follows: EB = Ps x Loot The criminal's cost equation is as follows: EC = [Pp x (I + F)] + AC Where: EB is the expected benefits of burglary Ps is the probability of successfully burglarizing a house Loot is the dollar take from the burglary EC is the expected costs of
burglary Pp is the probability of imprisonment I is the income the criminal gives up if caught and imprisoned F is the dollar value the criminal puts on freedom AC is the anguish cost of committing a burglary Refer to Situation 33-1. If the prospective criminal sets the following values: Ps = 50 percent Loot = $30,000 Pp = 10 percent I = $10,000 F = $25,000 AC = $5,000 The prospective criminal's expected benefit from committing the burglary is ______________ and his expected cost of committing the burglary is _______________. Economic theory tells us that under these circumstances, the prospective criminal ______________ commit the burglary.
A) $15,000; $8,500; will
B) $15,000; $8,500; will not
C) $15,000; $40,000; will not
D) $17,500; $12,000; will
A
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Total utility can be thought of as the
A. total satisfaction derived from a bundle of goods. B. minimum amount of money a consumer is willing to spend on a bundle of goods. C. additional satisfaction a consumer receives from the marginal unit of a good. D. willingness to pay for the marginal unit of a good.
In an economy with ________, there are more prices than in an economy with ________
A) barter; money B) fiat money; commodity money C) fiat money; barter D) money; barter
An increase in the prices of ________ goods is unlikely to put downward pressure on a currency's nominal exchange rate
A) parity B) nontradable C) identical D) relative
The marginal propensity to save is always larger than the marginal propensity to consume
Indicate whether the statement is true or false