1. Consider an economy with a single firm and a single consumer.The firm marginal abatement costs of pollution x, MAC = 120 ? .4x,and the consumer suffers marginal damages of pollution MD =.25x.

a. If the firm has the right to pollute, what is the minimumamount of money it would accept from the consumer to abate 50 unitsof emissions?

b. If the firm has the right to pollute, what is the maximumamount of money the consumer would pay the firm for it to abate 50units of emissions?

c. If the consumer has the right to a clean environment, what isthe minimum amount they would be willing to accept to allow thefirm to produce 100 units of emissions?

d. If the consumer has the right to a clean environment, explainthe transaction (including payment amounts) that would get theeconomy to the efficient level of pollution?