D. More Coase (Answer each question with a small paragraph) Here is an actual story about mushroom farming in BC (June 7, 2019: https://globalnews.ca/news/5368441/summerland-fungus-farm-controversy-okanagan/ )

1. In a carefully labelled diagram (what is Q? is there DWL?) show why there is a conflict between those who want to grow mushroom and their neighbors.

2. Who is causing the externality? Explain. (HINT: Coase)

3. Assume the mushrooms are producing a bad smell (in this case the farmer says he isn't). According to simple Coase, what will happen if the authorities say that the farmer should be allowed to produce the smell? Explain.

4. According to complex Coase, if the authorities say that the farmer should be allowed to produce the smell, will society reach the optimal outcome? Why or why not?

5. According to Block, should the farmer be allowed to produce the smell? Why or why not?