Consider a river found in the city of Philadelphia, and then answer the questions that follow. The city has a resort whose visitors use the river for recreation. The city also has a tannery that dumps industrial waste into the river. This pollutes the river and makes it a less desirable vacation destination. That is, the tannery's waste decreases the resort's economic profit. Suppose that the tannery could use a different production method that involves recycling water. This would reduce the pollution in the river to levels safe for recreation, and the resort would no longer be affected. If the tannery uses the recycling method, then the tannery's economic profit is $1,500 per week, and the resort's economic profit is $1,800 per week. If the tannery does not use the recycling method, then the tannery's economic profit is $2,000 per week, and the resort'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 tannery's economic profit and the resort's economic profit combined) with and without recycling. Profit Tannery Resort Action (Dollars) (Dollars) No Recycling 2,000 Recycling 1,500 Total (Dollars) 1,000 1,800 Total economic profit is highest when the recycling production method is When the tannery uses the recycling method, the resort earns $1,800-$1,000 = $800 more per week than it does with no recycling. Therefore, the resort should be willing to pay up to $800 per week for the tannery to recycle water. However, the recycling method decreases the tannery's economic profit by $2,000-$1,500 - $500 per week. Therefore, the tannery should be willing to use the recycling method if it is compensated with at least $500 per week. Suppose the resort has the property rights to the river. That is, the resort has the right to a clean (unpolluted) river. In this case, assuming the two firms can bargain at no cost, the tannery will the recycling method and will pay the resort per week. Now, suppose the tannery has the property rights to the river, including the right to pollute it. In this case, assuming the two firms can bargain at no cost, the tannery will the recycling method, and the resort will pay the tannery The resort will make the most economic profit when per week. True or False: The tannery will use the recycling method, regardless of who has the property rights. True False Consider a river found in the city of Philadelphia, and then answer the questions that follow. The city has a resort whose visitors use the river for recreation. The city also has a tannery that dumps industrial waste into the river. This pollutes the river and makes it a less desirable vacation destination. That is, the tannery's waste decreases the resort's economic profit. Suppose that the tannery could use a different production method that involves recycling water. This would reduce the pollution in the river to levels safe for recreation, and the resort would no longer be affected. If the tannery uses the recycling method, then the tannery's economic profit is $1,500 per week, and the resort's economic profit is $1,800 per week. If the tannery does not use the recycling method, then the tannery's economic profit is $2,000 per week, and the resort'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 tannery's economic profit and the resort's economic profit combined) with and without recycling. Profit Tannery Resort Action No Recycling Recycling (Dollars) (Dollars) 2,000 1,000 Total (Dollars) 1,500 1,800 Total economic profit is highest when the recycling production method is When the tannery uses the recycling method, the resort earns $1,800-$1,000 = $800 more per week than it does with no recycling. Therefore, the resort should be willing to pay up to $800 per week for the tannery to recycle water. However, the recycling method decreases the tannery's economic profit by $2,000-$1,500 - $500 per week. Therefore, the tannery should be willing to use the recycling method if it is compensated with at least $500 per week. Suppose the resort has the property rights to the river. That is, the resort has the right to a clean (unpolluted) river. In this case, assuming the two firms can bargain at no cost, the tannery will the recycling method and will pay the resort per week. Now, suppose the tannery has the property rights to the river, including the right to pollute it. In this case, assuming the two firms can bargain at no cost, the tannery will the recycling method, and the resort will pay the tannery The resort will make the most economic profit when per week. the tannery has property rights to pollute the river True or False: The tannery will use the recycling met it has property rights to a clean river True False