There is a factory that is dumping toxic waste into a river where a resort is located
Question:
There is a factory that is dumping toxic waste into a river where a resort is located downstream. At the moment the factory is not filtering the water that it dumps into the river. There is a filter it could install that would remove a significant amount of the toxic elements from the water before it is dumped in the river. The factory and the resort have each assessed the situation and come up with the following data:
| Gains to: | Choice 1 Factory with filter | Choice 2 Factory with no filter |
| Factory | $700/day | $800/day |
| Resort | $250/day | $100/day |
If the factory is given ownership of the river, how much would the resort be willing to pay to get the factory to make a different choice?
a) Up to $150
b) Up to $80
c) Up to $50
d) Up to $250
Part 2:
Refer to the same table below, If the factory is given ownership of the river and the resort offers a bribe of $150, will the factory accept?
a) Yes
b) No
Expert Answer:
