Suppose Erie Textiles can dispose of its waste "for free" by dumping it into a nearby river. While the firm benefits from dumping waste into the river, the waste reduces fish and bird reproduction. This causes damage to local fishermen and bird watchers. At a cost, Erie Textiles can filter out the toxins, in which case local fishermen and bird watchers will not suffer any damage. The relevant gains and losses (in thousands of dollars)for the three parties are listed below. The cost (in thousands of dollars)of the filter to Erie Textiles is ________, and the net benefit (in thousands of dollars)of the filter to the fishermen and bird watchers is ________.
A)$400; $310
B)$310; $200
C)$200; $75
D)$200; $235

Question

Suppose Erie Textiles can dispose of its waste "for free" by dumping it into a nearby river. While the firm benefits from dumping waste into the river, the waste reduces fish and bird reproduction. This causes damage to local fishermen and bird watchers. At a cost, Erie Textiles can filter out the toxins, in which case local fishermen and bird watchers will not suffer any damage. The relevant gains and losses (in thousands of dollars)for the three parties are listed below.  The cost (in thousands of dollars)of the filter to Erie Textiles is ________, and the net benefit (in thousands of dollars)of the filter to the fishermen and bird watchers is ________.
A)$400; $310 
B)$310; $200 
C)$200; $75 
D)$200; $235

Quizplus · Accepted Answer

With the filter, Erie's benefits are $200 lower, the fishermen's benefits are $130 higher, and the bird watchers' benefits are $105 higher.

Suppose Erie Textiles Can Dispose of Its Waste "For Free