Answered: Again, suppose the first bill that is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The blue curve on the following graph shows the tradeoff between security and tourism; that is, combinations of security and tourism above the blue curve are not possible, and those on or below the curve are possible. The vertical axis measures security, defined as the probability that a terrorist is intercepted before entering the country. The horizontal axis measures the number of yearly visitors to the United States, in millions.

Suppose that before 9/11, there were 55 million visitors per year, and the probability of intercepting any particular terrorist at customs and immigration was 10%, as indicated by the purple point (diamond symbol).

After the 9/11 attacks, a debate is held in Congress. Members of both parties agree that security measures need to be improved. However, there is some disagreement as to how much additional security is needed.

Suppose the first bill that is introduced mandates that security be improved so that the probability of catching a terrorist at the border increases from 10% to 15%.

Again, suppose the first bill that is introduced mandates that security be improved so that the probability of catching a terrorist at the border increases from 10% to 15%, and these measures do not change the position of the blue curve. The opportunity cost of this increase in security is __________million visitors per year.

Suppose the first bill is passed, raising the probability of catching any given terrorist from 10% to 15%. However, this isn’t enough for some lawmakers. One representative introduces a bill that would increase security by an additional 15 percentage points.

Again, assume these measures do not change the position of the blue curve. The opportunity cost of this additional measure is _______million additional visitors per year.

Refer back to your previous answers. The opportunity cost of increasing the probability of catching a terrorist from 15% to 30% is______ greater or less or equal to_____ the opportunity cost of increasing that probability from 10% to 15%.

### Tourism and Security Trade-Off Analysis

#### Graph Interpretation

This scatter plot graph illustrates the relationship between tourism, measured as millions of visitors per year, and security, represented by the percent of terrorists caught. Each data point on the scatter plot marks a unique observation within this dataset.

##### Axes:
- **X-Axis (Tourism):**
- Labeled as **"TOURISM (Millions of visitors per year)"**
- Ranges from 0 to 100 million visitors

- **Y-Axis (Security):**
- Labeled as **"SECURITY (Percent of terrorists caught)"**
- Ranges from 0% to 50%

##### Data Points:
- Individual data points are marked with black crosses (+) on the primary graph area, indicating various instances of tourism and security data.
- There's a purple diamond (♦) symbol within the graph, likely denoting a significant data point or average value.
- Another symbol, a gray star (★), exists outside the main scatter plot area and might signify an outlier or target benchmark.

##### Trendline:
- A blue curving line fitted among the data points represents a likely inverse relationship between the two variables (Tourism and Security). As tourism increases, security percentage tends to decrease, indicating a potential trade-off between tourism influx and the ability to catch terrorists.

##### Key Insights:
- Points distributed mostly downhill on the blue line reflect decreasing security effectiveness with increasing tourism.
- The star outside the plot area may suggest an aspiration or a data point significantly differing from the observed trend.

This graph is crucial for policy-makers, highlighting the balance required between boosting tourism and maintaining security effectiveness. Different strategies can be deduced from various points in the plot to optimize both sectors simultaneously.

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