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Question
Scenario 1:It is the factory's choice whether to install a filter. It is the choice of the nearby fishermen whether to install a treatment plant. Dollar figures show profit. The factory and the fishermen can negotiate costlessly, and no one else is affected by the result.
Factory Fishermen
A: No filter or treatment plant $10,000 $2,000
B: Filter; no treatment plant $6,000 $10,000
C: No filter; treatment plant $10,000 $4,000
D: Filter; treatment plant $6,000 $6,000
It would be acceptable to both parties to have the fishermen pay the factory
A) $0 to install a filter.
B) $500 to install a filter.
C) $4,000 to install a filter.
D) $6,000 to install a filter.
E) any amount greater than $4,000 and less than $6,000 to install the filter and make both parties better off.
Answer
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