Environmental Economics

3. Use the following graph of a refined petroleum market located on a river to answer the questions below. $ price per barrel ~ MEC A D B C Qc Q (thousands of barrels) a. Give the economic interpretation of each of the labeled areas: A, B, C, and D. b. Which area represents the loss to the petroleum refineries as a result of the restoration of efficiency? C. Which area represents the net gain to society? Should the reduction in output from Qc to QE take place? Why or why not? d. Describe the bargaining process between the refineries and a group of recreational water users downstream from the refineries, assuming the refineries have the right to pollute