Although economic analysis is not particularly relevant in explaining some crimes of passions and violence (for example, murder and rape), it does provide interesting insights on such property crimes as robbery, burglary, and auto theft.
Through extension, the theory of rational consumer behaviour provides some useful insights on criminal behaviour. Both the lawful consumer and the criminal try to maximize their total utility (or net benefit). For example, you can remove a textbook from the campus bookstore either by purchasing it or stealing it. If you buy the book, youractjoojislegal; you criminal has several facets. First, there are the guilt costs, which for many people are substantial. Such individuals would not steal from others even if there were no penalties for doing so; their moral sense of right and wrong would entail too great a guilt cost relative to the benefit from the stolen good. Other types of costs include the direct costs of the crim-
will choose to steal the book because the marginal benefit of $80 will exceed the marginal cost of $50. In contrast, someone having a guilt cost of, say, $40, will not steal the book. The marginal benefit of $80 will not be as great as the marginal cost of $90 (= $50 of penalty cost + $40 of guilt cost).
This perspective on illegal behaviour has some interesting
McConnell-Brue-Barbiero: I Front Matter I Preface
Microeconomics, Ninth Canadian Edition xxii Preface
• Study Questions A comprehensive list of questions is located at the end of each chapter. The old cliché that you "learn by doing" is very relevant to economics. Use of these questions will enhance your understanding. We designate several of them as "Key Questions" and answer them in the Study Guide.
— • Internet Application Questions Students are presented with questions to explore on the Internet relevant to the topic discussed in the chapter. From the McConnell Web site, www.mcgrawhill.ca/college/mcconnell9, students will find direct links to the Web sites included in these questions.
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internet application questions
Check out the National Post 500 list of the largest Canadian firms at <www. nationalpostbusiness.com/datamining/top500/ top500.htm>. From the top ten profit list, select three firms from three different industries and discuss the likely sources of economies of scale that underlie their large size. Use the Yahoo search engine at <www. yahoo.ca> to locate a company's homepage of your choice. Find and review the company's income statement in its annual report and classify the nonrevenue items as either fixed or variable costs. Are all costs clearly identifiable as either fixed or variable? What item would be considered as accounting profit? Would economic profit be higher or lower than this accounting profit?
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