Suppose a local meat packing company dumps waste into a river,causing a firm located downstream that uses the water to incur costs to restore the water quality.A solution to this problem that would improve efficiency might involve:
1)the meat-packing company relocating near a different river;
2)the meat-packing company buying the downstream firm;
3)permitting the downstream firm to impose a fee on the meat-packing company.

Question

Quizplus · Accepted Answer

Option 1 would simply shift the problem to a different river, and not actually solve the problem of waste dumping. Option 2 is not a feasible solution as purchasing the downstream firm may not be economically viable for the meat-packing company. Option 3 is the best choice as it would create a financial incentive for the meat-packing company to reduce waste dumping and prevent the downstream firm from incurring costs to restore water quality. Therefore, option 3 is the most efficient solution. Option 2 would also work, but might not be economically feasible. Thus, the answer is D, as both options 2 and 3 are acceptable solutions.

Suppose a Local Meat Packing Company Dumps Waste into a River,causing