A stand-up paddleboard outfitter operates without insurance. The outfitter's marginal cost of safety (e.g., staff training, rescue equipment) is MC_A = 100 + 14A, where A is the number of safety actions taken. The marginal benefit of those actions is given by MB_B = 200 - 6A. The optimal number of precautions for this outfitter to take is ____. A) 100 B) 14 C) 5 D) 2

Question

Quizplus · Accepted Answer

To find the optimal number of precautions (A), set the marginal cost of safety (MCS) equal to the marginal benefit of safety (MBS) and solve for A. MCS = MBS gives 100 + 14A = 200 - 6A. Solving this equation for A yields A = 5.

A Stand-Up Paddleboard Outfitter Operates Without Insurance