SQ3_ExternalitiesAK(1)

The table below shows the daily profits for the

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Unformatted text preview: amp Canoe, The Lakeside Café regularly dumps garbage into Lake Dreary, and this makes the lake smelly and dirty and negatively impacts Camp Canoe’s profits because parents don’t want to send their kids to a camp on a dirty, smelly lake. The table below shows the daily profits for The Lakeside Café and Camp Canoe when the Lakeside Café does and does not dump its garbage in the lake. No Garbage Garbage in in the Lake the Lake Lakeside Café 1000 1100 Camp Canoe 600 400 a. Is it socially efficient for The Lakeside Café to dump their garbage into Lake Dreary? Explain. b. If the The Lakeside Café and Camp Canoe cannot negotiate with each other, and if The Lakeside Café has the right to dump garbage into the lake, then what will be the likely outcome? c. If the Lakeside Café and Camp Canoe can cos...
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