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 V the recycling method, and the boat tour will pay the ketchup factory ' m The ketchup factory will make the E -mic prot when Y . Total economic prot is highest when the recycling production method is V . When the ketchup factory uses the recycling method, the boat tour earn 1,500 : $1,100 more per week than it does with no recycling. Therefore, the boat tour should be willing to pay up to $1,100 per week up factory to recycle water. However, the recycling method decreases the ketchup factory's economic prot by $2,500 $1,800 : $ - u -- -k. Therefore, the ketchup factory should be willing to use the recycling method if it is compensated with at least $700 per week. Total economic profit is highest when the recycling production method is '7 . When the ketchup factory uses the recycling method, the boat tour earns $2,600 $1,500 : $1,100 more per week than it does with no recycling. Therefore, the boat tour should be willing to pay up to $1,100 per week for the ketchup factory to recycle water. However, the recycling method decreases the ketchup factory's economic profit by $2,500 1 $1,800 : $700 per week. Therefore, the ketchup factory should be willing to use the recycling method if it is compensated with at least $700 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. [n this case, assuming the two firms can bargain at no cost, the ketchup factory will Y the recycling method and will pay the boat tour V per week. Now, suppose the ketchup factory has the property rights , including the right to pollute it. In this case, assuming the two firms can bargain at no cost, the ketchup factory will Y the recy od, and the boat tour will pay the ketchup factory Y 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 Y the recycling method and will pay the boat tour v per week. tory has the property rights to the lake, including the right to pollute it. In this case, assuming the two firms can bargain between $0 and $400 . will V the recycling method, and the boat tour will pay the ketchup factory Y per week. between $400 and $700 between $700 and $1,100 the most economic prot when Y . The ketchup factory will make the most economic prot when True or False: The ketchup factory will use the recycling meth- the boat tour has property rights to a clean lake it has property rights to pollute the lake 0 True 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 'V the recycling method and will pay the boat tour V 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 'V the recycling method, and the boat tour will pay the ketchup factory V per week. The ketchup factory will make the most economic prot when True or False: The ketchup factory will use the recycling method, regardless of who has the property rights. 0 True 0 False 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 $1,800 per week, and the boat tour's economic profit is $2,600 per week. If the ketchup factory does not use the recycling method, then the ketchup factory's economic profit is $2,500 per week, and the boat tour's economic profit is $1,500 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 prot combined) with and without recycling. Profit Ketchup Factory Boat Tour Total Action (Dollars) (Dollars) (Dollars) No Recycling 2,500 1,500 :] Recycling 1,800 2,600 :] 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 Y the recycling method, and the boat tour will pay the ketchup factory V per week. the most economic prot when V . between $0 and $400 tory will use the recycling method, regardless of who has the property rights. between $400 and $700 between $700 and $1,100 I False 8. 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 clumps 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 tou r's economic profit