Refer to Situation 33-1. If the prospective criminal sets the following values:
Ps = 60 percent
Loot = $10,000
Pp = 10 percent
I = $20,000
F = $25,000
AC = $10,000
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) $6,000; $14,500; will not
B) $6,000; $14,500; will
C) $6,667; $6,000; will
D) $17,500; $12,000; will

Question

Quizplus · Accepted Answer

The expected benefit is calculated as Ps * Loot = 0.60 * $10,000 = $6,000. The expected cost is calculated as Pp * (I + F) + AC = 0.10 * ($20,000 + $25,000) + $10,000 = $14,500. Since the expected cost ($14,500) is greater than the expected benefit ($6,000), the prospective criminal will not commit the burglary.