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Lake Smiley

 

 

 

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Fish Till U Drop vs New Sense Inc

PICTURE OF BEAUTIFUL LAKE SMILEY

Long ago in a land full of lakes, there was one beautiful lake that was the most productive in its ability to provide a happy and safe home for millions and millions of fish. For thousands of years the fish in the lake multiplied and prospered. The only threat to the existence of the fish was a bear or two and a few water fowl that flew over the lake during various seasons.

 

Then, some fishermen discovered that the fish were delicious. They discovered that what they caught provided plenty of food for the fishermen and other people were willing to trade valuable items for the extra fish that were caught. This inspired the fishermen to fish more. Soon a thriving metropolis began to emerge on the shore of the lake and the fishermen named the lake, Lake Smiley.

 

As the years passed and new technology was discovered and developed, a firm called New Sense Inc decided that the eastern shore of Lake Smiley was a perfect place to build its new factory. Lake Smiley provided the perfect outlet for its effluents. Soon, New Sense Inc was pulling in a profit of 500 dubals a year! There were smiles aplenty at New Sense Inc.

 

But as profits spiraled upward for New Sense Inc, the fishermen began to harvest fewer and fewer fish. When fish were found floating belly-up in Lake Smiley, the fishermen were not smiling. Their once high profits of 500 dubals had dwindled to 100 dubals. Something had to be done. Soon, a new association of fishermen was formed. It was called the Fish Till U Drop Association (FTUDA). In no time, 90% of the fishermen had joined FTUDA. The 10% of the fishermen who had not joined the association were called free-sailing sailors.

 

Representatives from FTUDA went to New Sense Inc and demanded that the factory install filters and provide treatment to the water in Lake Smiley so the fishermen could enjoy a bountiful harvest and be all smiles once again. The New Sense Inc people laughed and laughed. They pointed out that filters and treatment would cost the company 300 dubals. This would reduce the New Sense Inc profits by 3/5ths and ruin the company.

 

From an economist's viewpoint, what is the solution to this situation?

 

In your answer, make certain you include the concepts from The Basics page.

If you pay attention to the details in the situation described above you'll have no trouble doing so.

 

 

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Copyright © 1996 Amy S Glenn
Last updated:   09/13/2017   0130

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