Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. Explain how this demonstrates that economic agents respond to incentives.

Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. Explain how this demonstrates that economic agents respond to incentives.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter1: What Is Economics?

Section: Chapter Questions

Problem 3DQ

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Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.
Explain how this demonstrates that economic agents respond to incentives.

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