In order to minimize the NET costs associated with crime,
A. no crime should be eliminated.
B. steps must be taken to eliminate all crime.
C. crime should be reduced to the level at which the marginal cost from crime equals the marginal cost of crime prevention.
D. crime should be reduced to the level at which the total benefit from crime equals the total cost of crime prevention.
Answer: C
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Henry, a perfectly competitive lime grower in Southern California, notices that the market price of limes is greater than his marginal cost. What should Henry do?
A) expand his output to increase profits B) shut down and incur a loss equal to his total fixed cost C) advertise his limes to be able to sell more output D) look for the output level where marginal revenue minus marginal cost is maximized E) shut down and earn no profit but also incur no loss
Why would a firm in a monopolistically competitive industry advertise?
What will be an ideal response?