Suppose Erie Textiles can dispose of its waste "for free" by dumping it into a nearby river. While the firm benefits from dumping waste into the river, the waste reduces fish and bird reproduction. This causes damage to local fishermen and bird watchers. At a cost, Erie Textiles can filter out the toxins, in which case local fishermen and bird watchers will not suffer any damage. The relevant gains and losses (in thousands of dollars) for the three parties are listed below. $$\begin{array} { | l | c | c | }
\hline & \text { With Filter } & \text { Without Filter } \
\hline \text { Gains to Erie } & \$ 200 & \$ 400 \
\hline \text { Fisherman } & \$ 180 & \$ 50 \
\hline \text { Bird Watchers } & \$ 130 & \$ 25 \
\hline
\end{array}$$ Suppose that Erie Textiles can only negotiate with one of the affected groups. Will Erie operate with a filter?
A)Yes, if they negotiate with the Bird Watchers, but not if they negotiate with the Fishermen.
B)No, regardless of which group they negotiate with.
C)Yes, if they negotiate with the Fishermen, but not if they negotiate with the Bird Watchers.
D)Yes, regardless of which group they negotiate with.

Question

Suppose Erie Textiles can dispose of its waste "for free" by dumping it into a nearby river. While the firm benefits from dumping waste into the river, the waste reduces fish and bird reproduction. This causes damage to local fishermen and bird watchers. At a cost, Erie Textiles can filter out the toxins, in which case local fishermen and bird watchers will not suffer any damage. The relevant gains and losses (in thousands of dollars) for the three parties are listed below. $$\begin{array} { | l | c | c | } 
\hline & \text { With Filter } & \text { Without Filter } \
\hline \text { Gains to Erie } & \$ 200 & \$ 400 \
\hline \text { Fisherman } & \$ 180 & \$ 50 \
\hline \text { Bird Watchers } & \$ 130 & \$ 25 \
\hline
\end{array}$$ Suppose that Erie Textiles can only negotiate with one of the affected groups. Will Erie operate with a filter?
A)Yes, if they negotiate with the Bird Watchers, but not if they negotiate with the Fishermen.
B)No, regardless of which group they negotiate with.
C)Yes, if they negotiate with the Fishermen, but not if they negotiate with the Bird Watchers.
D)Yes, regardless of which group they negotiate with.

Quizplus · Accepted Answer

The Answer of Suppose Erie Textiles can dispose of its waste "for free" by dumping it into a nearby river. While the firm benefits from dumping waste into the river, the waste reduces fish and bird reproduction. This causes damage to local fishermen and bird watchers. At a cost, Erie Textiles can filter out the toxins, in which case local fishermen and bird watchers will not suffer any damage. The relevant gains and losses (in thousands of dollars) for the three parties are listed below. $$\begin{array} { | l | c | c | } 
\hline & \text { With Filter } & \text { Without Filter } \
\hline \text { Gains to Erie } & \$ 200 & \$ 400 \
\hline \text { Fisherman } & \$ 180 & \$ 50 \
\hline \text { Bird Watchers } & \$ 130 & \$ 25 \
\hline
\end{array}$$ Suppose that Erie Textiles can only negotiate with one of the affected groups. Will Erie operate with a filter?
A)Yes, if they negotiate with the Bird Watchers, but not if they negotiate with the Fishermen.
B)No, regardless of which group they negotiate with.
C)Yes, if they negotiate with the Fishermen, but not if they negotiate with the Bird Watchers.
D)Yes, regardless of which group they negotiate with.

Suppose Erie Textiles Can Dispose of Its Waste "For Free