All potential criminals are alike. Each has a benefit B of committing a crime, where B...

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? [5 marks]

(b) Now suppose that there are an additional 50 criminals who are irrational and therefore, always commit crimes. How does your answer to part (a) change? [5 marks]

(c) Now suppose you can choose from one of the following two police forces:(i) Catches criminals with probability 0.25 and costs $500,000.(ii) Catches criminals with probability 0.15 and costs $250,000.The social cost of crime is: prison costs plus social harm plus police costs less the benefit to the criminal. In a world with 100 rational criminals and 50 irrational criminals, which of these police forces would you choose, and what level of sentence S would you choose. Justify for your answer. [10 marks]

Expert Solution

Rahul Sunny answered 1 year ago

2. All potential criminals are alike. Each has benefit B =$10,000 of committing a crime. The...

2. All potential criminals are alike. Each has benefit B =$10,000 of committing a crime. The cost to the criminal of being punished is T =$1,000 for each year spent in prison. Let p = 0.15 be the probability that a criminal is caught and punished. If a potential criminal decides not to commit a crime, they receive a wage w = $6, 000 with no probability of punishment. (a) What condition dictates when it is profitable for a potential...

1. Most violent crime occurs between A. juveniles. B. strangers. C. criminals. D. intimates. 2....

1. Most violent crime occurs between A. juveniles. B. strangers. C. criminals. D. intimates. 2. Violence is _______ in some subcultures, according to the subculture of violence thesis. A. used as a last resort B. neither celebrated nor stigmatized C. a sign of maturity D. not associated with guilt 3. Which of the following statements regarding corporate crime is true? A. Many corporations are violators. B. The most common punishment is prison. C. Corporate crime happens infrequently....

Assume that Jerry has been convicted of a serious crime where he can be punished by...

Assume that Jerry has been convicted of a serious crime where he can be punished by more than one year in prison. Does he have the right to a jury trial? It is up to the court to determine if he is entitled to a jury trial. Yes. He can only be tried by a jury since he has been convicted of a serious crime. Jerry has a right to a jury trial, however, he can waive the right to...

There are two Cournot competitors, A & B. Each has total cost of 12x, where x...

There are two Cournot competitors, A & B. Each has total cost of 12x, where x is a firm’s output, and demand is X = 400 – P, where P is market price. What will market price be in equilibrium? (a.) $239.8 (b.) $141.3 (c.) $130 (d.) $208 Graph it with labels, thanks!

Given an experimental design with four factors A, B, C and D where each factor has...

Given an experimental design with four factors A, B, C and D where each factor has two levels. Derive the formula for effect estimation of main effect of ?, interaction effect of ??, ??? and ????. (please use (1),a,b,c,d,ab,ac,ad,bc,bd,cd,abc,abd,acd,bcd,abcd to represent the response)

1. What is one benefit of system upgrades? A. All of the above B. Receiving input...

1. What is one benefit of system upgrades? A. All of the above B. Receiving input on the product C. Improved response quality D. Meaningful interaction with the end user 2. Which of the following is not a step of the Software Development Life Cycle? A. Demonstration B. Maintenance C. Installation D. Analysis 3. Which symbol is placed on any association that occurs between an actor and a procedure? A. [E] B. [C] C. Both [E] and [C] D. [I]...

You have a cation that has an equilibrium potential with a positive charge. Where is that...

You have a cation that has an equilibrium potential with a positive charge. Where is that ion more highly concentrated (Intracellular or extracellular)? How do you know? If an anion has a higher concentration outside the cell, what will be the charge of its equilibrium potential? Explain your answer.

Suppose that a farm’s use of nitrogen has a private benefit to the farm of, B...

Suppose that a farm’s use of nitrogen has a private benefit to the farm of, B = 20√ q, and a cost of $1 per unit. Further, suppose that the use of nitrogen has a social cost of, SC = 0.05q^2 . (a) Find the profit maximizing amount of nitrogen for the farmer. (b) Find the socially optimal amount of nitrogen (accounting for the benefits, price, and social costs). (c) What is the optimal Pigouvian tax? (d) In theory, the...

Mass m is in a potential well given by U(r) = m (a/(r10)– b/(r8)) where a...

Mass m is in a potential well given by U(r) = m (a/(r10)– b/(r8)) where a and b are known positive constants, and r is the distance from m to the force center, with r > 0. NOTE: Consider this problem as one-dimensional motion in the spherical coordinate r. Suppose that, when the atom is at equilibrium, it undergoes a small displacement x (where x << r0) from equilibrium and is released from rest; the displacement of the atom is...

a)Suppose A and B are disjoint events where A has probability 0.5 and B has probability...

a)Suppose A and B are disjoint events where A has probability 0.5 and B has probability 0.4. The probability that A or B occurs is B) The expected return of a kind of stock is 12% with standard deviation 10%. The expected return of a kind of bond is 4% with standard deviation 2%. The covariance of the return of the stock and of the bond is -0.0016. What is the standard deviation of a portfolio of 20% invested in...

Question