Question: Complete the following table by computing the total profit ( the tannery ' s economic profit and the resort's economic profit combined ) with and
Complete the following table by computing the total profit the tannerys economic profit and the resort's economic profit combined with and without recycling.
tableProfitActiontableTanneryDollarstableResortDollarstableTotalDollarsNo Recycling,Recycling
Total economic profit is highest when the recycling production method is
When the tannery uses the recycling method, the resort earns $$$ more per week than it does with no recycling. Therefore, the resort should be willing to pay up to $ per week for the tannery to recycle water. However, the recycling method decreases the tannerys economic profit by $$$ per week. Therefore, the tannery should be willing to use the recycling method if it is compensated with at least $ per week.
Suppose the resort has the property rights to the river. That is the resort has the right to a clean unpolluted river. In this case, assuming the two firms can bargain at no cost the tannery will the recycling method and will pay the resor per week.
Now, suppose the tannery has the property rights to the river, including the right to pollute it In this case, assuming the two firms can bargain at no cost the tannery wil the recycling method, and the resort will pay the tannery per week.
The resort will make the most economic profit wh
True or False: The tannery will use the recycling method only if the resort has the property rights.
True
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