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O ng.cengage.com ili Content MindTap - Cengage Learning CENGAGE | MINDTAP Search this course Homework (Ch 10) X Consider a lake found in the town
O ng.cengage.com ili Content MindTap - Cengage Learning CENGAGE | MINDTAP Search this course Homework (Ch 10) X Consider a lake found in the town of Center Barnstead, and then answer the questions that follow. and Study Tools The town has a boat tour whose visitors use the lake for A-Z Options recreation. The town also has a ketchup factory that dumps industrial waste into the lake. This pollutes the lake and Success Tips makes it a less desirable vacation destination. That is, the ketchup factory's waste decreases the boat tour's economic Success Tips profit . eedback 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 $1,900 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 $1,100 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 ,100 Recycling 1,800 1,90 MacBook AirO ng.cengage.com C out Lili Content MindTap - Cengage Learning CENGAGE |MINDTAP Q Search this course Homework (Ch 10) X Ketchup Factory Boat Tour Total Action (Dollars) Dollars) (Dollars) No Recycling 2,100 1,100 Recycling 1,800 1,900 A-Z Total economic profit is highest when the recycling production method is When the ketchup factory uses the recycling method, the boat tour earns $1,900 - $1,100 = $800 more per week than it does with no recycling. Therefore, the boat tour should be willing to pay up to $800 per week for the ketchup factory to recycle water. However, the recycling method decreases the ketchup factory's economic profit by $2, 100 - $1,800 = $300 per week. Therefore, the ketchup factory should be willing to use the ecycling method if it is compensated with at least $300 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 ketchup factory will make the most economic profit when True or False: The lake will remain polluted, regardless of who has the property rights. True False Grade It Now Save & Continue Continue without saving MacBook Air
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