Suppose Erie Textiles Can Dispose of Its Waste "For Free

question 114

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 the 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 (in thousands of dollars) and losses for the three parties are listed below. $$\begin{array} { l r c } & \text { With Filter } & \text { Without } \\\text { Gains to Erie } & \$ 200 & \$ 400 \\\text { Fishermen } & \$ 180 & \$ 50 \\\text { Bird Watchers } & \$ 130 & \$ 25\end{array}$$
Refer to the information given above.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:

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income or profits.

Net Operating Loss Carryforward

A tax provision that allows businesses to use a net operating loss in one year to offset taxable income in future years.

Business Acquisition

The act of acquiring control over another company either by purchasing its shares, assets, or both, often aiming to expand operations or enter new markets.