A e The village has a kayak rental whose visitors use the lake for recreation. The village also has a research facility that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the research facility's waste decreases the kayak rental's economic profit. Suppose that the research facility could use a different production method that involves recycling water. This would reduce the pollutio levels safe for recreation, and the kayak rental would no longer be affected. If the research facility uses the recycling method, then th facility's economic profit is $1,000 per week, and the kayak rental's economic profit is $2,600 per week. If the research facility does n recycling method, then the research facility's economic profit is $1,700 per week, and the kayak rental's economic profit is $1,500 pe figures are summarized in the following table. Complete the following table by computing the total profit (the research facility's economic profit and the kayak rental's economic pr with and without recycling. [+ Research Facility Action No Recycling (Dollars) 1,700 Profit Kayak Rental (Dollars) Total (Dollars) 1,500 Recycling 1,000 2,600 Total economic profit is highest when the recycling production method is When the research facility uses the recycling method, the kayak rental earns $2,600 - $1,500 $1,100 more per week than it d Therefore, the kayak rental should be willing to pay up to $1,100 per week for the research facility to recycle water. However, the decreases the research facility's economic profit by $1,700 - $1,000 = $700 per week. Therefore, the research facility should be recycling method if it is compensated with at least $700 per week. Suppose the kayak rental has the property rights to the lake. That is, the kayak rental has the right to a clean (unpolluted) lake assuming the two firms can bargain at no cost, the research facility will the recycling method and will pay the kaya rental per week. Now, suppose the research facility has the property rights to the lake, including the right to pollute it. In this case, assuming th at no cost, the research facility will the recycling method, and the kayak rental will pay the research facility per week. The kayak rental will make the most economic profit when True or False: The research facility will use the recycling method, regardless of who has the property rights. True False

A e The village has a kayak rental whose visitors use the lake for recreation. The village also has a research facility that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the research facility's waste decreases the kayak rental's economic profit. Suppose that the research facility could use a different production method that involves recycling water. This would reduce the pollutio levels safe for recreation, and the kayak rental would no longer be affected. If the research facility uses the recycling method, then th facility's economic profit is $1,000 per week, and the kayak rental's economic profit is $2,600 per week. If the research facility does n recycling method, then the research facility's economic profit is $1,700 per week, and the kayak rental's economic profit is $1,500 pe figures are summarized in the following table. Complete the following table by computing the total profit (the research facility's economic profit and the kayak rental's economic pr with and without recycling. [+ Research Facility Action No Recycling (Dollars) 1,700 Profit Kayak Rental (Dollars) Total (Dollars) 1,500 Recycling 1,000 2,600 Total economic profit is highest when the recycling production method is When the research facility uses the recycling method, the kayak rental earns $2,600 - $1,500 $1,100 more per week than it d Therefore, the kayak rental should be willing to pay up to $1,100 per week for the research facility to recycle water. However, the decreases the research facility's economic profit by $1,700 - $1,000 = $700 per week. Therefore, the research facility should be recycling method if it is compensated with at least $700 per week. Suppose the kayak rental has the property rights to the lake. That is, the kayak rental has the right to a clean (unpolluted) lake assuming the two firms can bargain at no cost, the research facility will the recycling method and will pay the kaya rental per week. Now, suppose the research facility has the property rights to the lake, including the right to pollute it. In this case, assuming th at no cost, the research facility will the recycling method, and the kayak rental will pay the research facility per week. The kayak rental will make the most economic profit when True or False: The research facility will use the recycling method, regardless of who has the property rights. True False

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 31P: Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as...

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