Question

An electronics manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts. If the cost of a stolen electronics part is $25, what is the MOST the firm would be willing to pay to hire the first security guard

Answer 1

Answer: $500

Explanation:

Had to complete the question first

No of security guard No of radio stolen/wk

0 50

200 30

400 20

600 14

800 8

1000 6

Explanation:

If the firm decides to hire the first security guard and a radio worth $25, MB = MC which gives us the sum of $500 which is the worth of hiring the first security guard. Hiring the guard is same as having no quarrel at all and paying for the stolen radios. This means the security guard would save 20 radios at $25 each.