Refer to Situation 33-1. If the prospective criminal sets the following values:
Ps = 75 percent
Loot = $50,000
Pp = 20 percent
I = $80,000
F = $35,000
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) $37,500; $28,000; will not
B) $37,500; $28,000; will
C) $6,667; $14,000; will not
D) $57,500; $120,000; will

Question

Quizplus · Accepted Answer

Expected benefit = Ps x Loot = 0.75 x $50,000 = $37,500 
Expected cost = Pp x (I + F + AC) = 0.20 x ($80,000 + $35,000 + $5,000) = $28,000

The expected benefit ($37,500) is greater than the expected cost ($28,000), so economically speaking, it would be rational for the prospective criminal to commit the burglary. Therefore, the answer is B.