American suburbs are expanding to more rural areas at the same time as pig farms are expanding in size (Economist, 2007d, p. 36). The smells emanating from the massive amounts of pig manure adversely affect property values. Imagine that the Little Pigs (LP) hog farm is situated near 100 houses. The table to the right shows, for each level of LP's output, the marginal cost (MC) of a hog, the marginal benefit (MB) to LP, and the marginal damage (MD) done to property values: Output MC (S) MB (S) MD ($) 1 400 1,600 400 2 800 1,600 800 3 1,200 1,600 900 4 1,600 1,600 1,000 5 3,200 1,600 1,200 6 6,400 1,600 1,400 a) Draw a graph including MC, MB, MD, and the additional curve that would be important for this type negative externality analysis. Be sure to FULLY LABEL all curves and both axes for full credit on your graph. (5 points) Market for Hogs Price b) How many hogs does LP produce? (2 points) c) What is the efficient number of hogs for LP to produce? (2 points) Quantity d) Suppose the owner of LP can reduce the marginal damages of hog smells by two-thirds by modifying the hogs' diet. The modified diet increases the marginal cost of each hog by $100. What is the efficient number of hogs? (Note: you don't necessarily have to draw a new graph to answer this question.) (2 points)