The following table indicates the reductions in total losses due to theft if a jewelry store hires additional security guards.
Table 12-1

-Refer to Table 12-1.If the security guards can be hired for $75 per day,how many guards should the shop hire?
A)two
B)three
C)four
D)five
E)six

Question

The following table indicates the reductions in total losses due to theft if a jewelry store hires additional security guards.
Table 12-1
 
-Refer to Table 12-1.If the security guards can be hired for $75 per day,how many guards should the shop hire?
A)two 
B)three 
C)four 
D)five 
E)six

Quizplus · Accepted Answer

As we can see from the table, adding one security guard per day reduces total losses by $150. Thus, we want to keep hiring security guards until the cost of hiring the next one is greater than the amount of money saved by reducing losses.

Adding the first security guard costs $75, but saves $150 in losses, so it has a net benefit of $75. Adding a second security guard costs another $75 but only saves an additional $100 in losses, for a net benefit of only $25. Adding a third security guard costs $75, but only saves an additional $50 in losses, resulting in a net loss of $25. Therefore, the jewelry store should hire two security guards for a net benefit of $100. Any more guards hired would result in a net loss.

Therefore, the best choice is letter A) two.

The Following Table Indicates the Reductions in Total Losses Due