Thread Textiles has a factory on a local river. Much of its waste is dumped into...

Thread Textiles has a factory on a local river. Much of its waste is dumped into the river at no cost to the factory. Thread Textiles has monetary benefits from the waste dumping because there is no cost charged for this. At the same time, the dumping activities causes harm to fish and bird populations which in turn has a negative effect on local fishermen and bird watchers. For a cost to Thread Textiles, a filter can be applied which will eliminate the harmful waste. With the filter in place, fishermen and bird watchers will no longer have the effects of the negative externality.

	With Filter	Without Filter
Gains to Thread	$600	$900
Fishermen	$175	$25
Bird Watchers	$120	$25

With the filter in place, what is the net benefit to the fishermen and bird watchers? With the filter in place, what is the cost to Thread Textiles?

$200; $75

$245; $300

$200; $75

$200; $235

Solutions

Expert Solution

Answer.) $245; $300

the net benefit to the fishermen and bird watchers With the filter in place = ( gain to fisherman with filter + gain to bird watchers with filters ) - ( gain to fisherman without filter + gain to bird watchers without filters )

= $295 - $50

= $245

the cost to Thread Textiles With the filter in place = Gain to thread textiles without filters - Gain to thread textiles with filters

= $900 - $600

=$300

Rahul Sunny answered 1 year ago

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