Table 11-5
A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard.

-Refer to Table 11-5.Suppose the cost to hire each guard is $120 per day and the 4 store owners have agreed to split the costs of hiring guards equally.How many guards would the owner of Store A prefer to hire?

Question

Table 11-5
A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard.
 
-Refer to Table 11-5.Suppose the cost to hire each guard is $120 per day and the 4 store owners have agreed to split the costs of hiring guards equally.How many guards would the owner of Store A prefer to hire?

Quizplus · Accepted Answer

If the cost to hire each guard is $120 per day and the 4 store owners have agreed to split the costs of hiring guards equally, then the total contribution per day will be $120 x 4 = $480.

To determine how many guards each store owner would prefer to hire, we need to calculate the total willingness to pay for each store owner.

For Store A: 
Willingness to pay for 1 guard = $60 
Willingness to pay for 2 guards = $110 
Willingness to pay for 3 guards = $135 
Willingness to pay for 4 guards = $150

Since Store A's willingness to pay for 1 guard is $60, which is less than the cost of $120 to hire 1 guard, Store A would not prefer to hire any guards.

Table 11-5 A Small Strip Mall Contains Four Retail Stores, and Crime