Complete the following table by computing the total profit (the chemical plant's economic profit and the campground's economic profit combined) with and without recydling. Profit Chemical Plant Campground Total (Dollars) (Dollars) (Dollars Action No Recyding 2,900 1,700 Recycling 2,600 2,500 Total economic profit is highest when the recycling production method is When the chemical plant uses the recyding method, the campground earns $2,500- $1,700 = $800 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $800 per week for the chemical plant to recyde water. However, the recydling method decreases the chemical plant's economic profit by $2,900 – $2,600 = $300 per week. Therefore, the chemical plant should be willing to use the recyding method if it is compensated with at least $300 per week. Suppose the campground has the property rights to the lake. That is, the campground has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the chemical plant will the recycling method and will pay the campground v per week. Now, suppose the chemical plant 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 chemical plant will v the recyding method, and the campground will pay the chemical plant per week. The chemical plant will make the most economic profit when True or False: The chemical plant will use the recyding method, regardless of who has the property rights. O True O False
Complete the following table by computing the total profit (the chemical plant's economic profit and the campground's economic profit combined) with and without recydling. Profit Chemical Plant Campground Total (Dollars) (Dollars) (Dollars Action No Recyding 2,900 1,700 Recycling 2,600 2,500 Total economic profit is highest when the recycling production method is When the chemical plant uses the recyding method, the campground earns $2,500- $1,700 = $800 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $800 per week for the chemical plant to recyde water. However, the recydling method decreases the chemical plant's economic profit by $2,900 – $2,600 = $300 per week. Therefore, the chemical plant should be willing to use the recyding method if it is compensated with at least $300 per week. Suppose the campground has the property rights to the lake. That is, the campground has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the chemical plant will the recycling method and will pay the campground v per week. Now, suppose the chemical plant 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 chemical plant will v the recyding method, and the campground will pay the chemical plant per week. The chemical plant will make the most economic profit when True or False: The chemical plant will use the recyding method, regardless of who has the property rights. O True O False
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Answer all parts of the question please.
Transcribed Image Text:Complete the following table by computing the total profit (the chemical plant's economic profit and the campground's economic profit combined) with
and without recycling.
Profit
Chemical Plant
Campground
Total
(Dollars)
(Dollars
Action
(Dollars)
No Recycling
2,900
1,700
Recycling
2,600
2,500
Total economic profit is highest when the recycling production method is
When the chemical plant uses the recyding method, the campground earns $2,500- $1,700 = $800 more per week than it does with no recycling.
Therefore, the campground should be willing to pay up to $800 per week for the chemical plant to recyde water. However, the recycling method
decreases the chemical plant's economic profit by $2,900 – $2,600 = $300 per week. Therefore, the chemical plant should be willing to use the
recyding method if it is compensated with at least $300 per week.
Suppose the campground has the property rights to the lake. That is, the campground has the right to a clean (unpolluted) lake. In this case,
assuming the two firms can bargain at no cost, the chemical plant will
the recycling method and will pay the campground
v per week.
Now, suppose the chemical plant 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 chemical plant will
the recycling method, and the campground will pay the chemical plant
per week.
The chemical plant will make the most economic profit when
True or False: The chemical plant will use the recycling method, regardless of who has the property rights.
O True
O False
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