Question - The town has a campground whose visitors use the lake for recreation. The town also has a chemical plant that dumps industrial waste into the lake. This pollutes the lake and makes it a less desirable vacation destination. That is, the chemical plant's waste decreases the campground's economic profit.Suppose that the chemical plant could use a different production method that involves recycling water. This would reduce the pollution in the lake to levels safe for recreation, and the campground would no longer be affected. If the chemical plant uses the recycling method, then the chemical plant's economic profit is $1,400 per week, and the campground's economic profit is $2,700 per week. If the chemical plant does not use the recycling method, then the chemical plant's economic profit is $2,200 per week, and the campground's economic profit is $1,500 per week. These figures are summarized in the following table.Options for #1- N/A (numbers)Options for #2- not used or used Option for # 3- not used or used Options for #4- $0, between $0 and $400, between $400 and $800, between $800 and $1,200Option for #5- it has property rights to pollute the lake Or the campground has property rights to a clean lake Option #6- true or false

Post-Lecture Quiz (Ch 10) Complete the following table by computing the total profit (the chemical plant's economic profit and the campground's economic profit combined) with and without recycling. Profit Chemical Plant Campground Total Action (Dollars) (Dollars) (Dollars) No Recycling 2,200 1,500 Recycling 1,400 2,700 Total economic profit is highest when the recycling production method is When the chemical plant uses the recycling method, the campground earns $2,700 - $1,500 = $1,200 more per week than it does with no recycling. Therefore, the campground should be willing to pay up to $1,200 per week for the chemical plant to recycle water. However, the recycling method decreases the chemical plant's economic profit by $2,200 - $1,400 = $800 per week. Therefore, the chemical plant should be willing to use the recycling method if it is compensated with at least $800 per week. Suppose the campground has the property rights to the lake. That is, the campground has the right to a clean (unpolluted) lake. In this case, assuming the two firms can bargain at no cost, the chemical plant will the recycling method and will pay the campground per week. Now, suppose the chemical plant has the property rights to the lake, including the right to pollute it. In this case, assuming the two firms can bargain at no cost, the chemical plant will the recycling method, and the campground will pay the chemical plant per week. The chemical plant will make the most economic profit when True or False: The lake will remain polluted, regardless of who has the property rights. True False