Question

Consider a lake found in the town of Center Barnstead, and then answer the questions that follow. The town has a resort whose visitors use the lake for recreation. The town also has a tannery that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the tannery's waste decreases the resort's economic profit. Suppose that the tannery 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 resort would no longer be affected. If the tannery uses the recycling method, then the tannery's economic profit is $2,000 per week, and the resort's economic profit is $2,900 per week. If the tannery does not use the recycling method, then the tannery's economic profit is $2,700 per week, and the resort's economic profit is $1,900 per week. These figures are summarized in the following table. Complete the following table by computing the total profit (the tannery's economic profit and the resort's economic profit combined) with and without recycling. Total (Dollars) Action No Recycling Recycling Profit Resort (Dollars) 1,900 2,900 Tannery (Dollars) 2,700 2,000 Total economic profit is highest when the recycling production method is

Answer 1

No Recycling = 2700+1900 = 4600

Recycling = 2000+2900 =4900

Blanks-

1) used

2) use

3) $0

4) use

5) between $700 and $1000

6) it has property rights to pollute(or clean) the lake

The statement is False