Question

This is urgent Please!!!

Cost Structure and Behavior.

When Dallas County implemented the Divert Offenders to Treatment (DOT) Program, they anticipated a sizable reduction in expenditures equal to the average cost per inmate multiplied by the number of “bed days” saved (nights in jail not needed) for each person with a serious mental illness who was diverted from the jail. Their expectation was based on a widely used costing approach that uses averages to project savings, rather than thinking in terms of the actual cost structure of jails. When they saw little or no cost savings, as for help. Unless the jail was over-crowded and paying to board prisoners in other county jails, there would be little in the way of cost savings from diverting on average 1-2 inmates per day.

o In your own words, explain why 1-2 empty jail beds do not automatically translate to a reduction in spending. Hint: Explain the difference between marginal costs and average costs and the cost structure of. Your response must include relevant cost terms and concepts.

Answer 1

1-2 empty jails would not translate into reduced spendings . the reason being that here the cost of infrastructure or the fixed costs is being ignored.

The cost of building jails and the buildings or infrastructure surrounding it is the fixed costs . The variable costs would be the food provided to the prisoners , or the cost of prisoners . When 1-2 jails are empty , it implies that the variable costs are not being incurred . We have already built the jails , so the fixed costs was already incurred in the past .

They have projected a reduction in average costs rather than the marginal costs , which results in little or no savings .

The average costs are the total costs divided by the number of inmates . This would include both fixed and variable costs , so even when the prisoners are reduced from 2000 to 1990 , the denominator hasn't changed much and would continue to reflect the no reduction in savings .

On the other hand , if we see the concept of marginal cost ie the cost incurred on an additional prisoner being brought to jail , we will be focussing only on the additional costs incurred. This would not include the fixed costs which was incurred on a large scale , rather would include the marginal or additional cost incurred on one more jail inmate . This way the actual figure of reduction could be seen .

The other part of shifting of 1-2 prisoners every day would result in a higher marginal cost because of the additional cost of shifting . Rather if the number of prisoners which are to be boarded to other counties increase , the fixed cost of prisoners vehicle would be the same for all so transporting more would mean less average cost per prisoner and a better way to reduce cost.

(you can comment for doubts )