Economics of Protecting Ithaca - Economics Essay Example

Economics of Protecting Ithaca

 

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Number of Police Officers to Hire
Total Social Cost
Marginal Cost
Total Social Benefit
Marginal Benefit
Net Social Benefit/ Loss (-)
0
$0

$0


1
50,000
50,000
93,000
93,000
43,000
2
100,000
50,000
175,000
82,000
32,000
3
150,000
50,000
246,000
71,000
21,000
4
200,000
50,000
306,000
60,000
10,000
5
250,000
50,000
355,000
49,000
-1,000
6
300,000
50,000
393,000
38,000
-12,000
7
350,000
50,000
420,000
27,000
-23,000
8
400,000
50,000
436,000
16,000
-34,000
1. 1 Police Officer
a. MC = 50,000
b. MB = 93,000
c. Net Social Benefit = 43,000

2. 2 Police Officers
a. MC = 50,000
b. MB = 82,000
c. Net Social Benefit = 32,000

3. 3 Police Officers
a. MC = 50,000
b. MB = 71,000
c. Net Social Benefit = 21,000

4. 4 Police Officers
a. MC = 50,000
b. MB = 60,000
c. Net Social Benefit = 10,000

 

5. 5 Police Officers
a. MC = 50,000
b. MB = 49,000

c. Net Social Benefit = -1,000
6. 6 Police Officers
a. MC = 50,000
b. MB = 38,000
c. Net Social Benefit = -12,000
7. 7 Police Officers
a. MC = 50,000
b. MB = 27,000
c. Net Social Benefit = -23,000
8. 8 Police Officers
a. MC = 50,000
b. MB = 16,000
c. Net Social Benefit = -34,000

 

9. After you share the results of your research at a meeting of the Ithaca Common Council, an alderman asks you to explain why the social marginal benefit would decrease with the hiring of each additional police officer. How would you respond?
Ithaca is a well-disciplined, small city, as compared to the larger cities where crime is a regular feature, e.g. NY and LA.  Even the incident of one crime in Ithaca is a big deal, usually turning into hue and cry.  The constant decrease in net social benefit as a result of an increase in the number of police officers shows that the city does not require a large number of officers to be added to its police force.  In economics this phenomenon is referred to as the law of diminishing returns, which may also be easily observed in the case of farmers on a plot of land (Samuelson & Nordhaus, 1998).

10. Citizens that advocate the hiring of 8 additional police officers tell the Ithaca Common Council that your results support their position because the hiring of the maximum number of police officers would also maximize the total benefits for the community. Do you agree or disagree with them? Why?
Hiring of eight additional police officers would be a costly mistake, seeing that the net social benefit decreases with increasing numbers of police officers.  Ithaca seeks to maximize its net social benefits, which take into account the costs of hiring additional police officers.  In other words, we are interested in the benefits of additional police officers at our expense.

 

 

11. How many officers would you recommend they hire? Why? Be specific.

 

Ithaca should hire only one police officer at present.  This would maximize the net social benefit of hiring an additional officer.  The police force of Ithaca will be strengthened through an additional officer.  By this decision, the Ithaca Community Council would help in protecting Ithaca from all crime.

 

 

 

 

 

 

 

References

 

Samuelson, P. A., & Nordhaus, W. D. (1998). Economics. New York: Irwin McGraw-Hill.

 

 

 

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