Economic Analysis of Social Issues 1st Edition by Alan Grant

Exercise 1

Jolie grows asparagus for a living. Her asparagus beds, fertilized with manure, are extraordinarily productive. When Jolie tends five beds, her profits are $3,000. When Jolie expands her operation to six beds, she earns $3,600. Next door, Maddox runs a tea shop. When Jolie tends five beds of asparagus, Maddox's customers can't detect the smell of manure from Jolie's beds, and Maddox earns $1,200. When Jolie tends six beds, the smell of manure is noticeable, and Maddox's profits fall to $800. Explain why it is probably unfair (though convenient) to characterize Jolie as the polluter and Maddox as the victim.