Calculating a Plantation Owner's Payoff
A single plantation owner, who is a price-taker in the world market, produces 20,000 tons of bananas. The market price for bananas is $400 per ton. The total private costs for producing this quantity (e.g., labor, fertilizer, land use) amount to $6,500,000. The owner also earns $150,000 in net income from an unrelated rental property. The production process, however, results in chemical runoff that causes an estimated $700,000 in damages to a local fishing industry. Based on a model where the owner's payoff is defined strictly as their total net income, what is the owner's calculated payoff?
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