I need help on this

Question 18 15 pts Residents of Pepperville have been complaining that the air from the town's Sriracha factories is too spicy. The residents have voted to reduce pollution from 10 to 4. Each company will be given 2 pollutions credits that they can use or sell to the other company (they have to reduce pollution by 3 units each if they don't buy/sell credits). Rooster Inc. Chili Corp. Reduced units Total Reduced units Total Marginal Cost of spicy air Cost Marginal Cost of spicy air Cost 50 50 90 90 12 120 70 2 200 110 3 210 90 3 330 130 320 110 4 480 150 5 459 130 5 650 170 1. If they can buy/sell the credits, which company would prefer to buy credits and why? 2. If they can negotiate an agreement, how many credits will be sold? 3. Explain why reducing production creates a more efficient market when there is a negative externality