Suppose that the fish cannery 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 hiking lodge would no longer be affected. If the fish cannery uses the recycling method, then the fish cannery's economic profit is $\backslash (\backslash$$ $2,100\backslash )$ per week, and the hiking lodge's economic profit is $\backslash (\backslash$$ $2,200\backslash )$ per week. If the fish cannery does not use the recycling method, then the fish cannery's economic profit is $\backslash (\backslash$$ $2,800\backslash )$ per week, and the hiking lodge's economic profit is $\backslash (\backslash$$ $1,000\backslash )$ per week. These figures are summarized in the following table. Complete the following table by computing the total profit $($the fish cannery's economic profit and the hiking lodge's economic profit combined$)$ with and without recycling.

Total economic profit is highest when the recycling production method is

When the fish cannery uses the recycling method, the hiking lodge earns $\backslash (\backslash$$ $2,200-\backslash$$ $1,000=\backslash$$ $1,200\backslash )$ more per week than it does with no recycling. Therefore, the hiking lodge should be willing to pay up to $\backslash (\backslash$$ $1,200\backslash )$ per week for the fish cannery to recycle water. However, the recycling method decreases the fish cannery's economic profit by $\backslash (\backslash$$ $2,800-\backslash$$ $2,100=\backslash$$ $700\backslash )$ per week. Therefore, the fish cannery should be willing to use the recycling method if it is compensated with at least $\backslash (\backslash$$ $700\backslash )$ per week.

Suppose the hiking lodge has the property rights to the lake. That is$,$ the hiking lodge has the right to a clean $($unpolluted$)$ lake. In this case, assuming the two firms can bargain at no cost$,$ the fish cannery will the recycling method and will pay the hiking lodge $\_$ per week.

Now, suppose the fish cannery 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 fish cannery will the recycling method, and the hiking lodge will pay the fish cannery $\_$ per week.

The hiking lodge will make the most economic profit wher

True or False: The fish cannery will use the recycling method only if the hiking lodge has the property rights.

True

False