1. The town of Terry has a lake, a resort whose visitors use the lake for recreation, and a cannery that emits industrial waste into the lake, which reduces the demand for the resort. The court considers using two legal rules to decide the case. ( 20 points) 1) The cannery has the right to pollute the lake. 2) The resort has the right to a clean lake and can force the cannery to filter the waste products out of the water it puts into the lake. The profits of the two firms are as follows: a. If there are no transactions costs to bargaining, for each of the legal rules used above, briefly explain what outcome would occur and why it would occur. b. If there are high transactions costs to bargaining and completing a sale of the property (say $10,000), explain what outcome would occur under each legal rule. 1. The town of Terry has a lake, a resort whose visitors use the lake for recreation, and a cannery that emits industrial waste into the lake, which reduces the demand for the resort. The court considers using two legal rules to decide the case. ( 20 points) 1) The cannery has the right to pollute the lake. 2) The resort has the right to a clean lake and can force the cannery to filter the waste products out of the water it puts into the lake. The profits of the two firms are as follows: a. If there are no transactions costs to bargaining, for each of the legal rules used above, briefly explain what outcome would occur and why it would occur. b. If there are high transactions costs to bargaining and completing a sale of the property (say $10,000), explain what outcome would occur under each legal rule