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. Local fishermen and bird watchers would be willing to compensate Erie Textiles ________ for operating with a filter.
A)up to $310,000
B)no more than $235,000
C)no more than $75,000
D)nothing

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.  Local fishermen and bird watchers would be willing to compensate Erie Textiles ________ for operating with a filter.
A)up to $310,000 
B)no more than $235,000 
C)no more than $75,000 
D)nothing

Quizplus · Accepted Answer

The increase in the fishermen's and bird watchers' benefits is $310  ̶  $75 = $235.

Suppose Erie Textiles Can Dispose of Its Waste "For Free