Suppose Erie Textiles Can Dispose of Its Waste "For Free

question 110

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. $$\begin{array} { | l | c | c | } \hline & \text { With Filter } & \text { Without Filter } \\\hline \text { Gains to Erie } & \$ 200 & \$ 400 \\\hline \text { Fisherman } & \$ 180 & \$ 50 \\\hline \text { Bird Watchers } & \$ 130 & \$ 25 \\\hline\end{array}$$ If Erie Textiles does not install the filter, there will be a net social ______ of ______ (in thousands of dollars) .

• A)loss; $35
• B)gain; $75
• C)loss; $110
• D)gain; $200

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Definitions:

Performance

The act or process of carrying out a task or function, often measured against preset standards.

Preparedness

The state of being ready and well-prepared for various situations or emergencies.

Taste Aversions

A learned response to eating spoiled or toxic food, leading to nausea or avoidance, even at the smell or thought of the food.

Seligman

A psychologist best known for his work on learned helplessness, positive psychology, and well-being.