2. Suppose there is a residential street wrth 10 houses, and all owners have the same tastes. At 3:00 A.M. Sunday morning, Caroline drives down the street in her car, Betty Lou. Betty Lou does not have a muffler. Suppose that Caroline values the privilege of driving down the street at $1 and that transaction costs are zero. a) Suppose that Caroline has the right to drive down the street and each owner is willing to pay Caroline $7 not to drive down the street. What will happen? Is Caroline's decision to drive down the street efcient? Explain. b) Suppose that instead of 15?, owners are willing to pay $12 to have Caroline not drive down their street. What will happen now? [fCaroline drives down the street will her action be efcient? Explain. c} Suppose that the owners have the right to exclude noisy cars 'orn their street. Using the information provided, reanswer (a) and (b), when property rights are assigned to home owners instead of Caroline. d) How would your conclusions change if transaction costs were not zero, but very high. 1What would be the efficient rule in that case? Explain