Wardco mining would like to expand operations in a west Texas region affecting a

Question

3. Wardco mining would like to expand operations in a west Texas region affecting a single small town. Expansion would put toxic chemicals into the groundwater that, if untreated, would make the water undrinkable. This is the only effect and, even then, the chemicals breakdown in about a decade.Â
   1. If it cost Wardco $10million to treat the water and the value of mined products to customers is $20million, should Wardco be required to treat the water?
   2. If it cost Wardco $10million to treat the water and the value of mined products to customers is $8million, requiring water treatment would kill the project. Should Wardco be required to treat the water in this case?
   3. If Wardco could purchase and relocate all the town’s residents for $5million, should Wardco be required to treat the water?

Explanation / Answer

yes according to the customer money of $20million,the water should be treated as it not only gives well good for use water but also we see that marginal is already rising by $10million.

if value of mined in $8million,then it should not be treated ,as their is a loss

but if the town is relocated and it just costs $5million,then the water can be treated

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