Question
A stand-up paddleboard outfitter operates without insurance. The outfitter's marginal cost of safety (e.g., staff training, rescue equipment) is MC A = 100 + 14
A stand-up paddleboard outfitter operates without insurance. The outfitter's marginal cost of safety (e.g., staff training, rescue equipment) isMCA= 100 + 14A. The marginal benefit of those actions is given byMBB= 200 - 6A, whereAis the number of safety actions taken.
The government has mandated that all SUP outfitters carry insurance, leading to a change in the outfitter's marginal benefit curve toMBB= 140 - 6A.
How does this government mandate change the efficient number of precautions taken by the outfitter? Solve for the number of precautions before and after the mandate.
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Managerial economics applications strategy and tactics
Authors: James r. mcguigan, R. Charles Moyer, frederick h. deb harris
12th Edition
9781133008071, 1439079234, 1133008070, 978-1439079232
