2. A smoker and a nonsmoker work together in an ofce. The smoker gets daily marginal benets of (24 - x) where x is the number of cigarettes smoked each day. The nonsmoker incurs marginal damages of 29: each day from smoke inhalation. (a) What is the socially optimal level of smoke? (b) The employer strongly favours incentives rather than regulations. What incentive would she apply to achieve the best possible amount of smoking? Explain. (c) A local company is advertising a new air lter machine that is guaranteed to remove 50% of cigarette smoke from a room. How would such a machine affect the "socially optimal" smoking rate and tax? ((1) The air lter rents for Rs. 18 per day. If, as a result of the rental, the tax adjusts to the level determined in part 0, would it be worthwhile for the smoker to rent the machine? Would it be worthwhile for the non-smoker to rent the machine