if you can answer atleast some of these questions it would be helpful.

Factory A operates in the business of cleaning metals and is located upstream from the town of Smallville. Factory A's owners place a value of $5 million on the factory ongoing operations. Factory A is leaking dangerous chemicals into the stream. Factory B, who is located downstream, operates in the business of food-packaging and must use the water from the stream to run its activity. The exposure of Factory B to the chemicals discharged in the stream causes a monetary loss to Factory B of $ 2 millions each year. Factory A could install filters that reduce the leakage of the dangerous chemical. Installing this filter would cost the factory $ 3 millions a year. Alternatively, Factory B could install wells on their property that would not be affected by the factory's chemical leaks. Installing the wells would cost Factory B $ 1 million a year. (Assume that Factory B generates enough revenue that is still makes substantial profits even after installing the wells.)

1) Given all the information above, is it socially efficient to have Factory A operating its business? In answering the question make sure to provide a numerical explanation.(Marks 2)

2) Considering the alternative ways of abating the negative externality, what is the socially efficient configuration of activities - factory A installing the filters, or factory B installing wells? Make sure to provide a numerical explanation by specifying how individual and social payoffs change.(Marks 3)

3) Assume zero transaction costs and assume that the court protects the Factory B's right to be free from interference through a property rule. What pattern of activity would you have expected to observe? Why? Make sure to provide a detailed explanation.(Marks 3)

4) Assume zero transaction costs and assume that the court protects the Factory B' right to be free from interference through a liability rule. What would be the most likely outcome you have expected to observe? Why? Make sure to provide a detailed explanation.(Marks 3)

5) Please explain the different distributional impact of protecting Factor B's right through, respectively, a liability rule and a property rule. In answering the question, explain how the change in the legal regime affects the parties' threat points.(Marks 3)

6) Now assume high transaction costs, what would be the efficientassignmentof legal rights AND the efficient method forprotectingthe right holder? Make sure to apply the "general transaction structure" model in light of the information costs.(Marks 4)

7) Now suppose that Factory B places a subjective value of $4 million on all the trouble and discomfort caused by the exposure to the chemicals.This is in addition to the monetary loss of $2 million. (So, the overall loss in welfare suffered by Factory B is equal to $ 6 million.) Assume high transaction costs. What would be the efficientassignmentof legal rights AND the efficient method forprotectingthe right holder? Make sure to apply the "general transaction structure" model in light of the information costs.(Marks 2)

Question 5 options: