Question

Suppose that you are the manager of a large retail store that is currently experiencing a shoplifting problem. Every hour, $25 worth of merchandise is being stolen from your store. Suppose that a security guard would completely eliminate the shoplifting in your store. The hourly market wage for a security guard is $33. If you were interested in maximizing your profits, should you hire a security guard?

Answer 1

Answer:

We will not hire a security guard.

Explanation:

Data provided

Merchandise stolen cost of every hour = $25

Hourly market wage for a security guard = $33

According to the given situation, The hourly loss is $25, and the hourly cost is $33, even if the shopkeeper keeps a security guard, then the cost per hour is $33, so the store loss increases by $33 - $25 = $8, so we will not hire the security guard to maximize the profit.