Situation 32-1
Suppose that the equation that represents the expected benefits of burglary for a given prospective criminal is as follows:

EB = P_s x Loot
The criminal's cost equation is as follows:
EC = [P_p x (I + F) ] + AC
Where:
EB is the expected benefits of burglary
P_s is the probability of successfully burglarizing a house
Loot is the dollar take from the burglary
EC is the expected costs of burglary
P_p 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 32-1. If the prospective criminal sets the following values:
P_s = 50 percent
Loot = $30,000
P_p = 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.

Question

Quizplus · Accepted Answer

$15,000; $8,500; willThe expected benefit (EB) is calculated as 50% of $30,000, which equals $15,000. The expected cost (EC) is calculated as 10% of ($10,000 + $25,000) plus the anguish cost of $5,000, totaling $8,500. Since the expected benefit exceeds the expected cost, economic theory suggests the prospective criminal will commit the burglary.

Situation 32-1 Suppose That the Equation That Represents the Expected Benefits of Benefits