Ben produces chemical compounds that sell for $500 in the market. This production process generates waste which Ben can dispose of in the river for free, or he can pay $300 for professional waste disposal services. The river is also used by swimmers and fishermen, who value having a clean river at $120 and $190 each. Assume there are no negotiation or transaction costs. a) What is the socially optimal outcome in this situation?

Ben produces chemical compounds that sell for $500 in the market. This production process generates waste which Ben can dispose of in the river for free, or he can pay $300 for professional waste disposal services. The river is also used by swimmers and fishermen, who value having a clean river at $120 and $190 each. Assume there are no negotiation or transaction costs. a) What is the socially optimal outcome in this situation?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter14: Environmental Economics

Section: Chapter Questions

Problem 7SQ

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