Suppose Erie Textiles Can Dispose of Its Waste "For Free

question 151

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.  
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.

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Definitions:

Cost Of Goods Sold

Expenses directly linked to creating products sold by a business, which include labor and materials.

Cash Paid

Cash paid encompasses any outflow of cash from a company or individual for various purposes, including expenses, acquisitions, or investments.

Suppliers

Entities that provide goods or services to another entity, typically a company, under terms outlined in a contract or agreement.

Salaries Payable

An account that records the amounts owed to employees for work performed but not yet paid.