5. Common resources versus private goods Outdoors season is underway in Oregon, and Maris and her childhood friends are planning a weekend fishing trip. They have the choice between fishing the river near town where anyone is allowed to fish without a permit, or they could PRIVATE drive a short distance to a creek located on a family friend's PROPERTY property in the woods. Assume throughout the problem that all fish caught in either body of water are free for those fishing to keep.The fish in the river are considered and whereas the fish in the private creek are and V . In other words, the fish in the river are an example of and the fish in the private creek are an example of Fishing in the river will likely lead to because of which of the following reasons? O Nobody will enjoy fishing because of the lack of private contributions to the maintenance of the river. O All fishermen will choose to fish in the river because of the limited access to the creek. O Anyone can fish in the river, and one person's fishing activity decreases the ability of someone else to fish with success. O All fishermen will choose to fish in the creek believing that there are more fish there.rival in consumption nonrival in consumptionnonexcludable excludablea common resource a club good a public good a private goodmoral hazard the free-rider problem the Tragedy of the Commons6. Common resources and the tragedy of the commons Felix, Larry, and Raphael are trappers who live next to a recreational hunting area that is open to trapping; in other words, anyone is free to use the recreational hunting area for trapping. Assume that these men are the only three trappers who trap in this recreational hunting area and that the recreational hunting area is large enough for all three trappers to trap intensively at the same time. Each year, the trappers choose independently how often to trap; specifically, they choose whether to trap intensively (that is, to set several traps and hunt long hours, which hurts the sustainability of the recreational hunting area if enough people do it) or to trap nonintensively (which does not hurt the sustainability of the recreational hunting area). None of them has the ability to control how much the others trap, and each trapper cares only about his own profitability and not about the state of the recreational hunting area. Assume that as long as no more than one trapper traps intensively, there are enough animals to restock the recreational hunting area. However, if two or more trap intensively, the recreational hunting area will become useless in the future. Of course, trapping intensively earns a trapper more money and greater profit because he can sell more animals.The recreational hunting area is an example of because the animals in the recreational hunting area are and Depending on whether Larry and Raphael both choose to trap either nonintensively or intensively, fill in Felix's profit-maximizing response in the following table, given Larry and Raphael's actions. Larry and Raphael's Actions Trap Nonintensively Trap Intensively Felix's Profit-Maximizing Response Which of the following solutions could ensure that the recreational hunting area is sustainable in the long run, assuming that the regulation is enforceable? Check all that apply. Convert the recreational hunting area to private property, and allow the owner to sell trapping rights. Develop a program that entices more trappers to move to the area. Outlaw intensive trapping.a club good a public good a common resource a private goodhonexcludable excludablenonrival in consumption rival in consumptionTrap Intensively Trap NonintensivelyTrap Nonintensively Trap Intensively8. The effects of property rights on achieving efficiency Consider a lake found in the village of Sturbridge, and then answer the questions that follow. The village has a boat tour whose visitors use the lake for recreation. The village also has a ketchup factory that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the ketchup factory's waste decreases the boat tour's economic profit.Suppose that the ketchup factory 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 boat tour would no longer be affected. If the ketchup factory uses the recycling method, then the ketchup factory's economic profit is $1,700 per week, and the boat tour's economic profit is $2,100 per week. If the ketchup factory does not use the recycling method, then the ketchup factory's economic profit is $2,100 per week, and the boat tour's economic profit is $1,400 per week. These figures are summarized in the following table. Complete the following table by computing the total profit (the ketchup factory's economic profit and the boat tour's economic profit combined) with and without recycling. Profit Ketchup Factory Boat Tour Total Action (Dollars) (Dollars) (Dollars) No Recycling 2,100 1,400 Recycling 1,700 2,100 Total economic profit is highest when the recycling production method isWhen the ketchup factory uses the recycling method, the boat tour earns $2,100 - $1,400 = $700 more per week than it does with no recycling. Therefore, the boat tour should be willing to pay up to $700 per week for the ketchup factory to recycle water. However, the recycling method decreases the ketchup factory's economic profit by $2,100 - $1,700 = $400 per week. Therefore, the ketchup factory should be willing to use the recycling method if it is compensated with at least $400 per week. Suppose the boat tour has the property rights to the lake. That is, the boat tour has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the ketchup factory will the recycling method and will pay the boat tour per week. Now, suppose the ketchup factory 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 ketchup factory will the recycling method, and the boat tour will pay the ketchup factory per week. The boat tour will make the most economic profit when True or False: The ketchup factory will use the recycling method, regardless of who has the property rights. O True O False$0 between $0 and $300 between $300 and $400 between $400 and $700$0 between $0 and $300 between $300 and $400 between $400 and $700the ketchup factory has property rights to pollute the lake it has property rights to a clean lake