use the following narrative for problems 9-12 A factory owned by the Papers-R-Us
ID: 1135213 • Letter: U
Question
use the following narrative for problems 9-12 A factory owned by the Papers-R-Us Company is located upstream from the town of Smallville, population 6,000. The factory is leaking dangerous chemicals into the stream. The inhabitants of Smallville get their drinking water from the stream. The chemicals are causing headaches that cause the inhabitants to miss many days of work, resulting in each inhabitant losing an average of $500 in wages each year. The factory could install filters that reduce the leakage of the dangerous chemical. Installing this filter would cost the factory $2 million a year. Alternatively, the inhabitants could install wells on their property that would not be affected by the factory's chemical leaks. Installing the wells would cost each inhabitant $300 a year 9. What is the efficient solution? 10. Assume the factory has no legal obligation to prevent chemical leaks. What will happen if there is no bargaining between the inhabitants and the factory? What will happen if there is bargaining?Explanation / Answer
Loss caused by the impure drinking water to the villagers per year:
Population x loss per person = 6,000 x $ 500 = $ 3,000,000
Cost of water filter = $ 2,000,000
Cost of water well Per person per year = $ 300, for all villagers it will cost = 6,000 x $ 300 = 1,800,000
Therfore the cheapest solution for the problem is installation of water well by the people of the village and since they are facing this problem due to the chemical factory hence this money should be reimbursed by the factory.
10. Of there is no legal obligation by the factory and there is no bargaining between the people and the factory management then each person of the village have to pay for their well and company won’t pay them anything. But if there are chances of bargaining between the people and the factory’ management then the solution given is above answer is most appropriate and that would be implemented.
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