(a) Compute the market equilibrium values of coal production and price in each time period. [10 points] (b) Note that market price in part (a) exceeds marginal cost even though the industry is perfectly competitive. Furthermore, market price goes up over time. Explain these two results in economic terms. [6 points] (0) Now assume that extraction and consumption of coal are polluting activities, with marginal external cost MEC; : 3 + qr in period i (Where i = 1, 2). How much coal would be allocated to the rst period and how much to the second period in a socially efcient allocation? [10 points] ((1) Compute the total social welfare loss (in present value terms) if the market fails to account for the externality identied in part (c), and calculate per unit taxes on coal needed in period 1 and period 2 to address this problem. [14 points]