The figure below shows the marginal benefit of having a security camera at the library (MB_L), the supermarket (MB_S), and the museum (MB_M). The marginal cost of hiring a security guard is the same at all three places and is given by MC. If each location installs the socially optimal number of security cameras, then the marginal benefit of the last security camera installed at each location will be: A)the same at all three locations. B)highest at the museum. C)highest at the grocery store. D)highest at the library.

Question

Quizplus · Accepted Answer

According to the graph, the socially optimal number of security cameras is where the marginal benefit equals the marginal cost. At that point, the marginal benefit of the last camera installed will be the same at all three locations since it is the point where the MBS curve intersects with the MC line. Therefore, the answer is choice A.

The Figure Below Shows the Marginal Benefit of Having a Security