Consider a lake found in the town of Center Barnstead, and then answer the questions that follow. The town has a campground whose visitors use the lake for recreation. The town also has a fish cannery that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the fish cannery's waste decreases the campground's economic profit. Suppose that the fish cannery could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the campground would no longer be affected. If the fish cannery uses the recycling method, then the fish cannery's economic profit is $1,500 per week, and the campground's economic profit is $1,800 per week. If the fish cannery does not use the recycling method, then the fish cannery's economic profit is $2,000 per week, and the campground's economic profit is $1,000 per week. These figures are summarized in the following table. Complete the following table by computing the total profit (the fish cannery's economic profit and the campground's economic profit combined) with and without recycling. Action Profit Fish Cannery Campground Total (Dollars) (Dollars) (Dollars) No Recycling 2,000 1,000 Recycling 1,500 1,800 Total economic profit is highest when the recycling production method is . When the fish cannery uses the recycling method, the campground earns $1,800−$1,000=$800$1,800−$1,000=$800 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $800 per week for the fish cannery to recycle water. However, the recycling method decreases the fish cannery's economic profit by $2,000−$1,500=$500$2,000−$1,500=$500 per week. Therefore, the fish cannery should be willing to use the recycling method if it is compensated with at least $500 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 fish cannery will the recycling method and will pay the campground per week. Now, suppose the fish cannery has the property rights to the lake, including the right to pollute it. In this case, assuming the two firms can bargain at no cost, the fish cannery will the recycling method, and the campground will pay the fish cannery per week. The campground will make the most economic profit when . True or False: The lake will remain polluted, regardless of who has the property rights. True False

Consider a lake found in the town of Center Barnstead, and then answer the questions that follow. The town has a campground whose visitors use the lake for recreation. The town also has a fish cannery that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the fish cannery's waste decreases the campground's economic profit. Suppose that the fish cannery could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the campground would no longer be affected. If the fish cannery uses the recycling method, then the fish cannery's economic profit is $1,500 per week, and the campground's economic profit is $1,800 per week. If the fish cannery does not use the recycling method, then the fish cannery's economic profit is $2,000 per week, and the campground's economic profit is $1,000 per week. These figures are summarized in the following table. Complete the following table by computing the total profit (the fish cannery's economic profit and the campground's economic profit combined) with and without recycling. Action Profit Fish Cannery Campground Total (Dollars) (Dollars) (Dollars) No Recycling 2,000 1,000 Recycling 1,500 1,800 Total economic profit is highest when the recycling production method is . When the fish cannery uses the recycling method, the campground earns $1,800−$1,000=$800$1,800−$1,000=$800 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $800 per week for the fish cannery to recycle water. However, the recycling method decreases the fish cannery's economic profit by $2,000−$1,500=$500$2,000−$1,500=$500 per week. Therefore, the fish cannery should be willing to use the recycling method if it is compensated with at least $500 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 fish cannery will the recycling method and will pay the campground per week. Now, suppose the fish cannery has the property rights to the lake, including the right to pollute it. In this case, assuming the two firms can bargain at no cost, the fish cannery will the recycling method, and the campground will pay the fish cannery per week. The campground will make the most economic profit when . True or False: The lake will remain polluted, regardless of who has the property rights. True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Consider a lake found in the town of Center Barnstead, and then answer the questions that follow.

The town has a campground whose visitors use the lake for recreation. The town also has a fish cannery that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the fish cannery's waste decreases the campground's economic profit.

Suppose that the fish cannery could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the campground would no longer be affected. If the fish cannery uses the recycling method, then the fish cannery's economic profit is $1,500 per week, and the campground's economic profit is $1,800 per week. If the fish cannery does not use the recycling method, then the fish cannery's economic profit is $2,000 per week, and the campground's economic profit is $1,000 per week. These figures are summarized in the following table.

Complete the following table by computing the total profit (the fish cannery's economic profit and the campground's economic profit combined) with and without recycling.

Action	Profit
Fish Cannery	Campground	Total
(Dollars)	(Dollars)	(Dollars)
No Recycling	2,000	1,000
Recycling	1,500	1,800	Total economic profit is highest when the recycling production method is . When the fish cannery uses the recycling method, the campground earns $1,800−$1,000=$800$1,800−$1,000=$800 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $800 per week for the fish cannery to recycle water. However, the recycling method decreases the fish cannery's economic profit by $2,000−$1,500=$500$2,000−$1,500=$500 per week. Therefore, the fish cannery should be willing to use the recycling method if it is compensated with at least $500 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 fish cannery will the recycling method and will pay the campground per week. Now, suppose the fish cannery has the property rights to the lake, including the right to pollute it. In this case, assuming the two firms can bargain at no cost, the fish cannery will the recycling method, and the campground will pay the fish cannery per week. The campground will make the most economic profit when . True or False: The lake will remain polluted, regardless of who has the property rights. True False

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.