3. (i) Consider the production of a competitive firm under the market price% 24230 per unit of the product the firm produces. The firm's marginal production cost equals 50 + q where q stands for the quantity the firm produces. This firm's product causes pollution to water nearby, resulting in the social marginal cost being 50+ 2q. Then the value of the Pigou tax equals (i).About the Coase theorem, the only correct statement among the following is(A)The Coase theorem suggests that assignment of property rights is irrelevant for efficiency if the transaction cost is nonzero but not far from zero(B)A ban on smoking is necessarily efficient(C) Any reform that reduces transaction costs is a Pareto improvement(D) The Coase theorem misrepresents some important aspects of Ronald Coase'theory of social costs

3. (20 marks) (0) (10 marks) Consider the production of a competitive firm under the market price $230 per unit of the product the firm produces. The firm's marginal production cost equals 50+ q where q stands for the quantity the firm produces. This firm's product causes pollution to water nearby, resulting in the social marginal cost being 50 + 2q. Then the value of the Pigou tax equals (ii).(10 marks) About the Coase theorem, the only correct statement among the following is (A) The Coase theorem suggests that assignment of property rights is irrelevant for efficiency if the transaction cost is nonzero but not far from zero (B) A ban on smoking is necessarily efficient (C) Any reform that reduces transaction costs is a Pareto improvement (D) The Coase theorem misrepresents some important aspects of Ronald Coase' theory of social costs a