7. Suppose that you were the manager of a large retail storethat was currently experiencing a shoplifting problem.Every hour, approximately $15 worth of merchandise wasbeing stolen from your store. Suppose that a security guardwould completely eliminate the shoplifting in your store. Ifyou were interested in maximizing your profits, should youhire a security guard if the wage rate of security guards was$20 per hour? Why or why not? What does this imply aboutthe relationship between average shoplifting per hour in theeconomy and the wage rates of security guards?

A cost-benefit analysis will determine whether or not to hire a security guard in this case. The…

Answered: 7. Suppose that you were the manager of…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter10: Unemployment

Section: Chapter Questions

Problem 10PA

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rom California to New York, legislative bodies across the United States are considering eliminating orreducing the surcharges banks impose on non-customers, who make $14 million in withdrawals from otherbanks’ ATM machines. On average, non-customers earn a wage of $26 per hour and pay ATM fees of $3.25per transaction. It is estimated that banks would be willing to maintain services for 6 million transactionsat $1.50 per transaction, while non-customers would attempt to conduct 22 million transactions at thatprice. Estimates suggest that, for every 1 million gap between the desired and available transactions, atypical consumer will have to spend an extra minutes traveling to another machine to withdraw cash.(a) Based on this information, what would be the nonpecuniary cost of legislation that would place a$1.50 cap on the fees banks charge for non-customer transactions?(b) What would be the full economic price of this legislation?(c) Using a graph, illustrate the situation described…
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