5 Refer to the figure below. Private markets will provideunits of this good per day, and the socially optimal number of units per day isSocial MC Private MCBDemandQuantity (units/day)Multiple CholceН: FH; GF; GG; FPrice ($/unit) Lakeview Spa and Shoreline Industries are both situated along the banks of Lake Dreary. Unfortunately for the owners of the LakeviewSpa, Shoreline Industries regularly dumps garbage into the lake, polluting the lake and negatively impacting Lakeview Spa's profits.The following table shows the firms' weekly profits when Shoreline Industries does and does not dump garbage into the lake.Does not dump garbageDumps garbage$1,100/week$400/weekShoreline Industries$1,000/weekLakeview Spa$600/weeka. If Shoreline Industries has the legal right to dump garbage into the lake, and Shoreline Industries and Lakeview Spa can negotiatewith one another at no cost, then will Shoreline Industries dump garbage into the lake?O Shoreline Industries will not dump garbage into the lake.O Shoreline Industries will dump garbage into the lake.Is this outcome socially efficient?O No.O Yes.b. If Shoreline Industries has the legal right to dump garbage into the lake, and it costs Lakeview Spa $120 per week to negotiate withShoreline Industries, then will Shoreline Industries dump garbage into the lake?O Shoreline Industries will not dump garbage into the lake.O Shoreline Industries will dump garbage into the lake.Is this outcome socially efficient?O No.O Yes.

"There are two separate questions so as per the guidelines answer is provided to the first…

Refer to the figure below. Private markets will provide units of this good per day, and the socially optimal number of units per day is Social MC Private MC Demand Quantity (units/day) Multiple Cholce H; F H; G F; G G; F Price ($/unit)

Refer to the figure below. Private markets will provide units of this good per day, and the socially optimal number of units per day is Social MC Private MC Demand Quantity (units/day) Multiple Cholce H; F H; G F; G G; F Price ($/unit)

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter17: Externalities And The Environment

Section: Chapter Questions

Problem 10PAE

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Question

Refer to the figure below. Private markets will provide
units of this good per day, and the socially optimal number of units per day is
Social MC Private MC
B
Demand
Quantity (units/day)
Multiple Cholce
Н: F
H; G
F; G
G; F
Price ($/unit)

Lakeview Spa and Shoreline Industries are both situated along the banks of Lake Dreary. Unfortunately for the owners of the Lakeview
Spa, Shoreline Industries regularly dumps garbage into the lake, polluting the lake and negatively impacting Lakeview Spa's profits.
The following table shows the firms' weekly profits when Shoreline Industries does and does not dump garbage into the lake.
Does not dump garbage
Dumps garbage
$1,100/week
$400/week
Shoreline Industries
$1,000/week
Lakeview Spa
$600/week
a. If Shoreline Industries has the legal right to dump garbage into the lake, and Shoreline Industries and Lakeview Spa can negotiate
with one another at no cost, then will Shoreline Industries dump garbage into the lake?
O Shoreline Industries will not dump garbage into the lake.
O Shoreline Industries will dump garbage into the lake.
Is this outcome socially efficient?
O No.
O Yes.
b. If Shoreline Industries has the legal right to dump garbage into the lake, and it costs Lakeview Spa $120 per week to negotiate with
Shoreline Industries, then will Shoreline Industries dump garbage into the lake?
O Shoreline Industries will not dump garbage into the lake.
O Shoreline Industries will dump garbage into the lake.
Is this outcome socially efficient?
O No.
O Yes.

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