7. The newly elected president of an island nation has pledged to reduce air pollution. The nation has no close neighbors-the only source of air pollution are the two domestic chemical plants run by firm A and firm B. Firm A has been in operation for 50 years and has a pollution abatement (i.e. reduction) cost of x3, where x is a unit of pollution. Firm B, which operates a 6-month old plant has a pollution abatement cost of x2. Assume that neither firm is initially engaging in pollution abatement. The per unit benefit to a unit of pollution abatement experienced by the island's citizens is constant at $300. a. What is the socially optimal level of pollution abatement? How is the socially optimal level of abatement split between the two firms? b. The president considers engaging in command and control style quantity regulation and declares that each firm must engage in 80 units of pollution abatement. Is this socially optimal? Why or why not? c. Alternatively, the president considers providing a subsidy of $300 per unit of pollution abatement. What is the per firm and total level of pollution abatement? Is this socially optimal