1. All potential criminals are alike. Each has a benefit B of committing a crime, where B = $10,000. The cost, to the criminal, of being punished is T =$1,000 for each year spent in prison. The probability of a criminal being caught and punished is p. Let S represent the number of years spent in prison (i.e., the sentence). Suppose there are 100 potential criminals. Each chooses whether to commit this crime which has a social harm cost of $100,000. Suppose criminals are caught with a 15% probability. The cost of prison is $5,000 per prisoner, per year. (a) Write down the condition for a rational criminal to commit a crime. What is the optimal choice of sentence, S? What is the total social cost associated with this choice!

1. All potential criminals are alike. Each has a benefit B of committing a crime, where B = $10,000. The cost, to the criminal, of being punished is T =$1,000 for each year spent in prison. The probability of a criminal being caught and punished is p. Let S represent the number of years spent in prison (i.e., the sentence). Suppose there are 100 potential criminals. Each chooses whether to commit this crime which has a social harm cost of $100,000. Suppose criminals are caught with a 15% probability. The cost of prison is $5,000 per prisoner, per year. (a) Write down the condition for a rational criminal to commit a crime. What is the optimal choice of sentence, S? What is the total social cost associated with this choice!

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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those determinations. Respond to the following questions in a minimum of 175 words: . Consider a situation that you might need to use your understanding of probability to make an informed decision. • What sorts of information would you collect? • How might you use what you have learned about probability to determine a course of action? What are the possible benefits and limitations of this approach? Due Monday Reply to at least 2 of your classmates. Be constructive and professional in your responses. Copyright 2020 by University of Phoenix. All rights reserved. New Group 1 17 Responses 33 Replies
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