E 1. Consider the following payo matrix for two rms. A chemical rm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. Payoff Matrix Chemical Firm 1 rI'on Pollution 2 Tons Pollution 15 20 Shut Down Beach 15 20 Operate 25 15 (a) If the chemical rm owns the lake and the beach owner must pay the chemical rm $10 to produce only one ton of pollution, what is the outcome? (b) If the beach owner owns the lake and the chemical rm must pay $10 per ton of pollution, what is the outcome? Compare this result to the case where nobody owns the lake