Scenario: a Chemical Factory Is Located Upstream on a River

question 115

Multiple Choice

Scenario: A chemical factory is located upstream on a river. The factory dumps its liquid waste into the river. A microbrewery is located downstream on this river; it uses the river water in its production process and values the clean water. The chemical factory can filter its liquid waste before dumping it into the river, but it would be costly to the factory. The table below shows the profit to these two businesses under different circumstances.

-Refer to scenario above.Could this externality problem be resolved by private negotiations between the chemical factory and the microbrewery?

• A) Yes, but only when the negotiations are relatively costless.
• B) Yes, but the chemical factory should be forced to pay a fine for polluting the river.
• C) No, because filtering the waste decreases the profit of the chemical factory.
• D) No, because dumping the waste into the river is free for the chemical factory.

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Definitions:

Hedge Sentence

A statement made with cautious language to lessen the impact or assertiveness of the claim, often used to introduce uncertainty or avoid directness.

Absolute Statements

Claims or propositions that do not allow for exceptions or conditions, often characterized by words like "always" or "never."

Overly Long Sentences

Sentences that are so extended in length that they may confuse the reader or obscure the main point.

Redundancies

Unnecessary repetitions or overlaps in language or in organizational roles, often leading to inefficiency.