Question: 2) Consider a factory that gains a benet from being able to generate pollution and a nearby farmer that suffers costs because of that pollution.

2) Consider a factory that gains a benet from being able to generate pollution and a nearby farmer that suffers costs because of that pollution. Suppose that the marginal benets to the factory and the marginal costs to the farmer are given by: Factory: MB = 500 5Q Farmer: M C = 200 + 1062 (a) Solve for the Optimal level of pollution that maximizes net social benets. Show mathematically and graphically.(4pts) (b.) If the farmer owns the prOperty rights, how much will the factory pay for the right to pollute? Show mathematically and graphically. (4pts) (c.) Calculate the net benets for the farmer. Please show your work. Show mathematically and graphically. (4pts) (d) Calculate the net benets for the factory. Please show your work. Show mathematically and graphically. (4pts) (e.) Suppose that instead of one farmer, there is a larger neighborhood affected by the factory's pollution. Explain the implications this has for Coasian bargaining. (2pts)

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