Total economic profit is highest when the recycling production method is When the chemical lab uses the recycling method, the water park earns $2,600 - $1,500 = $1,100 more per week than it does with no recycling. Therefore, the water park should be willing to pay up to $1,100 per week for the chemical lab to recycle water. However, the recycling method decreases the chemical lab's economic profit by $1,800 $1,100 = $700 per week. Therefore, the chemical lab should be willing to use the recycling method if it is compensated with at least $700 per week. Suppose the water park has the property rights to the lake. That is, the water park has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the chemical lab will the recycling method and will pay the water park per week. Now, suppose the chemical lab 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 lab will the recycling method, and the water park will pay the chemical lab week. The water park will make the most economic profit when True or False: The chemical lab will use the recycling method only if the water park has the property rights. True False per
Total economic profit is highest when the recycling production method is When the chemical lab uses the recycling method, the water park earns $2,600 - $1,500 = $1,100 more per week than it does with no recycling. Therefore, the water park should be willing to pay up to $1,100 per week for the chemical lab to recycle water. However, the recycling method decreases the chemical lab's economic profit by $1,800 $1,100 = $700 per week. Therefore, the chemical lab should be willing to use the recycling method if it is compensated with at least $700 per week. Suppose the water park has the property rights to the lake. That is, the water park has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the chemical lab will the recycling method and will pay the water park per week. Now, suppose the chemical lab 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 lab will the recycling method, and the water park will pay the chemical lab week. The water park will make the most economic profit when True or False: The chemical lab will use the recycling method only if the water park has the property rights. True False per
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:Action
No Recycling
Recycling
(Dollars)
1,800
1,100
(Dollars)
1,500
2,600
Total economic profit is highest when the recycling production method is
(Dollars)
When the chemical lab uses the recycling method, the water park earns $2,600 – $1,500 = $1,100 more per week than it does with no recycling.
Therefore, the water park should be willing to pay up to $1,100 per week for the chemical lab to recycle water. However, the recycling method
decreases the chemical lab's economic profit by $1,800 – $1,100 = $700 per week. Therefore, the chemical lab should be willing to use the recycling
method if it is compensated with at least $700 per week.
Suppose the water park has the property rights to the lake. That is, the water park has the right to a clean (unpolluted) lake. In this case, assuming
the two firms can bargain at no cost, the chemical lab will
the recycling method and will pay the water
park
per week.
Now, suppose the chemical lab 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 lab will
the recycling method, and the water park will pay the chemical lab
per
week.
True
The water park will make the most economic profit when
False
True or False: The chemical lab will use the recycling method only if the water park has the property rights.
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VIEWStep 3: 2) Determine what will happen if water park has property rights
VIEWStep 4: 3) Determine what will happen if Chemical lab has property rights
VIEWStep 5: 4) Determine when will water park make most economic profit
VIEWStep 6: 5) Evaluate the statement
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