Suppose Erie Textiles Can Dispose of Its Waste "For Free

question 170

Multiple Choice

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.  
When Erie Textiles operates without a filter, the total gain (in thousands of dollars) to all three parties is ________.

• A)$985
• B)$325
• C)$510
• D)$475

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Definitions:

Software Development Costs

Expenditures related to the design, development, or improvement of computer software, which can be capitalized or expensed depending on their nature and benefit to future periods.

U.S. GAAP

United States Generally Accepted Accounting Principles, the set of accounting standards and procedures used in the U.S. for preparing financial statements.

Research and Development

Activities undertaken by a company to innovate and introduce new products or services, or to improve existing ones, often involving considerable investment and risk.

R&D Expenditures

Costs incurred in the research and development of new products or services, aiming to improve or innovate offerings.