New Normal University has found it necessary to institute a crime-control program on its campus to deal with the high costs of theft and vandalism. The university is now considering several alternative levels of crime control. This table shows the expected total annual costs and benefits of these alternatives. If New Normal University undertakes program Level Three,

Question

New Normal University has found it necessary to institute a crime-control program on its campus to deal with the high costs of theft and vandalism. The university is now considering several alternative levels of crime control. This table shows the expected total annual costs and benefits of these alternatives.  If New Normal University undertakes program Level Three,

Quizplus · Accepted Answer

Program Level Three has a total cost of $800,000 and a total benefit of $700,000, meaning that the benefits are less than the costs. Additionally, since the marginal cost is higher than the marginal benefit for this program, there would be an underallocation of resources to crime control if the university chooses this option. Therefore, the best choice would be to implement either Program Level One or Program Level Two, where the benefits exceed the costs and the marginal benefit is greater than the marginal cost.

New Normal University Has Found It Necessary to Institute a Crime-Control