*Attention* Please Answer Question Electronically for Clear Reading/Understanding *

*Attention* Please Answer Question Electronically for Clear Reading/Understanding *

3. Consider a situation between a smoker (polluter) and a bystander (pollutee) represented by the following graph: Polluter Pollutee 10 MB polluter MC pollutee 5 0 20 10 Amount of cigarettes smoked by polluter (cigarettes are free) Assume the pollutant has the right to breathe clean air (i.e., he has the right to no pollution). Find: a. under no negotiation, the polluter and polluter welfare (or surplus). Also find total welfare (known also as total surplus). b. Under negotiation, the polluter pays $5 to have the right to smoke a cigarette (assume the polluter accepts this offer). Find in this case the polluter, pollutee, and total surplus. C. Explain if the social welfare (total surplus) under negotiation increases and, if so, why