Marty, a musician, frequently plays at large parties and nightclubs. Marty has musical equipment worth $8,000, and he takes precautions to prevent theft. The marginal benefit of these precautions is given by MB = 60 - 3A, where A is the number of precautions Marty takes to reduce theft. The marginal cost of preventing theft (i.e., the time, energy, and effort expended) is given by MC = 2A. What is Marty's optimal level of precautions?
A) 20
B) 12
C) 30
D) 60

Question

Quizplus · Accepted Answer

To find the optimal level of precautions, set the marginal benefit equal to the marginal cost: 60 - 3A = 2A. Solving for A gives A = 12.

Marty, a Musician, Frequently Plays at Large Parties and Nightclubs