Question: 4. Using the information provided in problem 2, suppose that no one owns the lake and that the government issues three marketable pollution permits, two

4. Using the information provided in problem 2, suppose that no one owns the lake and that the government issues three marketable pollution permits, two to the farmer and one to the factory. Each permit allows the same amount of pollution of the lake, and the total amount of pollution is the efficient amount.

a. What is the quantity of pesticide produced?

b. What is the market price of a pollution permit?

Who buys and who sells a permit?

c. What is the connection between your answer and the answers to problems 2a and 3a?

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