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Consider a restaurant that wants to avoid kitchen fires. The restaurant could make many investments both to avoid the fires in the first place and

Consider a restaurant that wants to avoid kitchen fires. The restaurant could make many investments both to avoid the fires in the first place and to quickly and safely put them out if they do occur. Suppose that the marginal cost (MC) and marginal benefit (MB) of these investments in fire control technologies is illustrated in the followingfigure.

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