8. The effects of property rights on achleving efficiency Consider a river found in the city of Philadelphia, and then answer the questions that follow. The city has a campground whose visitors use the river for recreation. The oty 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 campground's economic profit. Suppose that the tannery could use a different production method that involves recycling water. This would reduce the pollubion in the river to levels safe for recreation, and the campground would no longer be affected. If the tannery uses the recycling mechod, then the tannery's economic profit is $2,000 per week, and the campground's economic profit is $2,900 per week. If the tannery does not use the recycing method, then the tannery's economic profit is $2,700 per week, and the campground's economic profit is $1,900 per week. These figures are summarized in the following table. 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 camparound would no longer be affected. If the tannery uses the recyding method, then the tannery's economic profit is $2,050 per week, and the campground's economic profit is $2,900 per week. If the tannery does not use the recyding method, then the tannery's economic profit is $2,700 per week, and the campground's economic profit is $1,900 per week. These figures are summarized in the following table. Complete the following table by computing the cotal profit (the tannery's economic profit and the campground's economic profit combined) with and without recycling. Total economic profit is highest when the recyeling production method is When the tannery 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 tannery to recyde water, However, the recycing method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery 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 river. That is, the campground 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 campground 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 recyding method, and the campground will pay the tannery per week When the tannery 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 tannery to recyde water. However, the recycling method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery 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 river. That is, the campground 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 campground per week. Now, suppose the tannery has the property rights to the river, induding the right to pollute it. In this case, assuming the two firms can bargain at no cost, the cannery will the recyeling method, and the campground will pay the tannery per week. The campground will make the most economic profit when True or fatse: The tannery will use the recycling method, regardiess of who has the property rights. True False Total economic profit is highest when the recycling production method is When the tannery uses the recycling method, the campground earns $2, 0=$1,000 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $1,000 per we nnery to recycle water. However, the recycling method decreases the tannery's economic profit by $2.700$2.000=$700 per week. Thererwe, tie tannery 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 river. That is, the campground 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 campground 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 campground will pay the tannery per week. The campground will make the most economic profit when. True or false: The tannery will use the recycling method, regardiess of who has the property rights. True False Total economic profit is highest when the recyding production method is When the tannery uses the recycling method, the campground earns $2,900 - $1,900=$1,000 more per week than it does with no recyeling. Therefore, the campground should be willing to pay up to $1,000 per week for the tannery to recycle water. However, the recycing method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery should be willing to use the recyeling method if it is compensated with at least $700 per week. Suppose the campground has the property rights to the river. That is, the campground 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 campground per week. Now, suppose the tannery has the property rights to the river, I _ right to pollute it. In this case, assuming the two firms can bargain at no cost, the tannery will the recycling method, and t.r. Jornd will pay the tannery per week. The campground will make the most economic proft when. True or False: The tannery will use the recycling method, regardless of who has the property rights. True False Total economic profit is highest when the recycling production method is When the tannery uses the recycling method, the campground eams $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 tannery to recycle water. However, the recycling method decreases the tannery's economic profit by $2,700 - $2,000=$700 per week. Therefore, the tannery 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 river. That is, the campground 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 campground per week. the property rights to the river, including the right to pollute it. In this case, assuming the two firms can bargain at no the recycling method, and the campground will pay the tannery per week. most economic proft when Mue or raser me tanuery win use the recycling method, regardiess of who has the property rights. True Faise Total economic profit is highest when the recyeling production method is When the tannery uses the recycling method, the campground eams $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 tannery to recycle water. However, the recycling method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery should be willing to use the recycling method if it is compensoted with at least $700 per week. Suppose the campground has the property rights to the river. That is, the campground 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 campground 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 recyeling method, and the compground will pay the tannery per week. The campground will make the most economic proft when True or False: The tannery will use the recycling method, regardless of who has the property rights. True False Total economic profit is highest when the recycling production method is When the tannery uses the recycling method, the campground eams $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 tannery to recycle water. However, the recycling method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery 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 river. That is, the campground has the right to a clean (unpolluted) river. In this case, assuming the two firms can bargain at no cost, the tannery will the recyeling method and will pay the campground per week. Now, suppose the tannery has the property rights to the river, including the right to pollute is. In this case, assuming the two firms can bargain at no cost, the tannery will the recycling method, and the campground will poy the tannery per week. The campground will make the most economic proft when True or False: The tannery will use the recycling method, re True False 8. The effects of property rights on achleving efficiency Consider a river found in the city of Philadelphia, and then answer the questions that follow. The city has a campground whose visitors use the river for recreation. The oty 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 campground's economic profit. Suppose that the tannery could use a different production method that involves recycling water. This would reduce the pollubion in the river to levels safe for recreation, and the campground would no longer be affected. If the tannery uses the recycling mechod, then the tannery's economic profit is $2,000 per week, and the campground's economic profit is $2,900 per week. If the tannery does not use the recycing method, then the tannery's economic profit is $2,700 per week, and the campground's economic profit is $1,900 per week. These figures are summarized in the following table. 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 camparound would no longer be affected. If the tannery uses the recyding method, then the tannery's economic profit is $2,050 per week, and the campground's economic profit is $2,900 per week. If the tannery does not use the recyding method, then the tannery's economic profit is $2,700 per week, and the campground's economic profit is $1,900 per week. These figures are summarized in the following table. Complete the following table by computing the cotal profit (the tannery's economic profit and the campground's economic profit combined) with and without recycling. Total economic profit is highest when the recyeling production method is When the tannery 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 tannery to recyde water, However, the recycing method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery 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 river. That is, the campground 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 campground 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 recyding method, and the campground will pay the tannery per week When the tannery 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 tannery to recyde water. However, the recycling method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery 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 river. That is, the campground 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 campground per week. Now, suppose the tannery has the property rights to the river, induding the right to pollute it. In this case, assuming the two firms can bargain at no cost, the cannery will the recyeling method, and the campground will pay the tannery per week. The campground will make the most economic profit when True or fatse: The tannery will use the recycling method, regardiess of who has the property rights. True False Total economic profit is highest when the recycling production method is When the tannery uses the recycling method, the campground earns $2, 0=$1,000 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $1,000 per we nnery to recycle water. However, the recycling method decreases the tannery's economic profit by $2.700$2.000=$700 per week. Thererwe, tie tannery 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 river. That is, the campground 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 campground 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 campground will pay the tannery per week. The campground will make the most economic profit when. True or false: The tannery will use the recycling method, regardiess of who has the property rights. True False Total economic profit is highest when the recyding production method is When the tannery uses the recycling method, the campground earns $2,900 - $1,900=$1,000 more per week than it does with no recyeling. Therefore, the campground should be willing to pay up to $1,000 per week for the tannery to recycle water. However, the recycing method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery should be willing to use the recyeling method if it is compensated with at least $700 per week. Suppose the campground has the property rights to the river. That is, the campground 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 campground per week. Now, suppose the tannery has the property rights to the river, I _ right to pollute it. In this case, assuming the two firms can bargain at no cost, the tannery will the recycling method, and t.r. Jornd will pay the tannery per week. The campground will make the most economic proft when. True or False: The tannery will use the recycling method, regardless of who has the property rights. True False Total economic profit is highest when the recycling production method is When the tannery uses the recycling method, the campground eams $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 tannery to recycle water. However, the recycling method decreases the tannery's economic profit by $2,700 - $2,000=$700 per week. Therefore, the tannery 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 river. That is, the campground 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 campground per week. the property rights to the river, including the right to pollute it. In this case, assuming the two firms can bargain at no the recycling method, and the campground will pay the tannery per week. most economic proft when Mue or raser me tanuery win use the recycling method, regardiess of who has the property rights. True Faise Total economic profit is highest when the recyeling production method is When the tannery uses the recycling method, the campground eams $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 tannery to recycle water. However, the recycling method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery should be willing to use the recycling method if it is compensoted with at least $700 per week. Suppose the campground has the property rights to the river. That is, the campground 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 campground 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 recyeling method, and the compground will pay the tannery per week. The campground will make the most economic proft when True or False: The tannery will use the recycling method, regardless of who has the property rights. True False Total economic profit is highest when the recycling production method is When the tannery uses the recycling method, the campground eams $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 tannery to recycle water. However, the recycling method decreases the tannery's economic profit by $2,700$2,000=$700 per week. Therefore, the tannery 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 river. That is, the campground has the right to a clean (unpolluted) river. In this case, assuming the two firms can bargain at no cost, the tannery will the recyeling method and will pay the campground per week. Now, suppose the tannery has the property rights to the river, including the right to pollute is. In this case, assuming the two firms can bargain at no cost, the tannery will the recycling method, and the campground will poy the tannery per week. The campground will make the most economic proft when True or False: The tannery will use the recycling method, re True False