(Table: Security in a Residential Community) The table Security in a Residential Community shows the total cost of hiring a 24-hour security service in a community of 100 residents and each individual resident's total benefit from the service.The efficient number of security guards is _.
A)0
B)2
C)3
D)4

Question

(Table: Security in a Residential Community) The table Security in a Residential Community shows the total cost of hiring a 24-hour security service in a community of 100 residents and each individual resident's total benefit from the service.The efficient number of security guards is _.
A)0 
B)2 
C)3 
D)4

Quizplus · Accepted Answer

To determine the efficient number of security guards, we should look for the point where the marginal cost (MC) equals marginal benefit (MB). This is the point where the additional benefit of hiring one more security guard equals the additional cost of that additional guard. 
Looking at the table, we can see that the marginal cost increases as we hire more guards (since the total cost increases by a larger amount with each additional guard). We can also see that the marginal benefit for each resident decreases as we hire more guards (since the benefit per resident decreases).
The efficient number of guards is where MC=MB, or where the total cost of hiring one more guard is equal to the total benefit of that guard for all residents. From the table, we can calculate that the total cost of hiring 3 guards is $12,000, and the total benefit of having 3 guards for all residents is $14,400. Therefore, the efficient number of guards is 3.

(Table: Security in a Residential Community) the Table Security in a Residential