Complete the following table by computing the total profit (the research lab's economic profit and the campground's economic profit combined) with and without recycling. Action No Recycling Recycling Research Lab (Dollars) 2,700 2,000 Profit Campground (Dollars) 1,900 2,900 Total (Dollars) Total economic profit is highest when the recycling production method is When the research lab uses the recycling method, the campground earns $2,900 - $1,900 = $1,000 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $1,000 per week for the research lab to recycle water. However, the recycling method decreases the research lab's economic profit by $2,700 - $2,000 = $700 per week. Therefore, the research lab should be willing to use the recycling method if it is compensated with at least $700 per week. Suppose the campground has the property rights to the lake. That is, the campground has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the research lab will the recycling method and will pay the campground per week. Now, suppose the research lab has the property rights to the lake, including the right to pollute it. In this case, assuming the two firms can bargain a no cost, the research lab will the recycling method, and the campground will pay the research lab pe week.
Complete the following table by computing the total profit (the research lab's economic profit and the campground's economic profit combined) with and without recycling. Action No Recycling Recycling Research Lab (Dollars) 2,700 2,000 Profit Campground (Dollars) 1,900 2,900 Total (Dollars) Total economic profit is highest when the recycling production method is When the research lab uses the recycling method, the campground earns $2,900 - $1,900 = $1,000 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $1,000 per week for the research lab to recycle water. However, the recycling method decreases the research lab's economic profit by $2,700 - $2,000 = $700 per week. Therefore, the research lab should be willing to use the recycling method if it is compensated with at least $700 per week. Suppose the campground has the property rights to the lake. That is, the campground has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the research lab will the recycling method and will pay the campground per week. Now, suppose the research lab has the property rights to the lake, including the right to pollute it. In this case, assuming the two firms can bargain a no cost, the research lab will the recycling method, and the campground will pay the research lab pe week.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 10SCQ: Suppose a city releases 16 million gallons of raw sewage into a nearby lake. Table 12.8 shows the...
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