Suppose there is a small, freshwater lake that has three homes built on its shores. The people living in these homes use the lake for recreational purposes, but unfortunately, the water in the lake has been contaminated by an old industrial plant that has since closed. At present, the lake contains 5 ppm of the contaminant. It is possible to clean the water by using an expensive water treatment process. Each of the homeowners on the lake would enjoy cleaner water and would be willing to pay a certain amount of money to have the water quality improved, but for each incremental improvement in water quality, there would be clean costs. The table below summarizes the value each of the homeowners would enjoy from a reduction in the level of contamination, and how much each increment of water quality improvement would cost.