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please answer these all questions correctly 66. Li can produce with or without a filter on his smokestack. Production without a filter results in greater

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66. Li can produce with or without a filter on his smokestack. Production without a filter results in greater smoke damage to Fung, say to Fung's health. Gains to Li: Damage to Fung: Li produces with filter Li produces without filter $206 $210 $86 $35 Suppose the property right is well assigned to either parties. When the negotiation cost for the two parties to reach an agreement is zero, we would expect Li to produce Answer56 ) filter. A) with B) without Please refer to the background information below to answer question 67 to 68. Two electricity generation firms, X and Y, can have the choice to reduce their emissions of pollution with a cost. The marginal costs of reducing the pollution of the two firms are different but are both increasing in the quantity of pollution reduction (tons), as described by the following two equations. Firm X: MCX = 602 +2.1 Rx dollars per day Firm Y: My = 934 + 2.5Ry dollars per day where Rx and Ry are the quantity of pollution reductions (in tons of the two firms respectively. When polllution is not regulated, the two profit maximizing firms will spend no effort in pollution reduction, and hence generate the following quantity of pollution. Fimm X: 261 tons Firm Y: 201 tons Now, the government would like to reduce the overall pollution by hull by issuing tradable pollution permits of 276 tons, with 130,5 tons allocated to Firm X and 145.5 tots allocated to Firm Y. Under the pollution permit scheme, a firm will be allowed to generate q tons of pollution only if the firm has pollution permits of q tons. Suppose these permits are perfectly divisible and the negotiation cost to reach an agreement between the two firms is zero. 67. We would expect Firm X to produce Answer67 tons of pollution. 68. We would expect Firm Y to produce Answer 68 tons of pollution 66. Li can produce with or without a filter on his smokestack. Production without a filter results in greater smoke damage to Fung, say to Fung's health. Gains to Li: Damage to Fung: Li produces with filter Li produces without filter $206 $210 $86 $35 Suppose the property right is well assigned to either parties. When the negotiation cost for the two parties to reach an agreement is zero, we would expect Li to produce Answer56 ) filter. A) with B) without Please refer to the background information below to answer question 67 to 68. Two electricity generation firms, X and Y, can have the choice to reduce their emissions of pollution with a cost. The marginal costs of reducing the pollution of the two firms are different but are both increasing in the quantity of pollution reduction (tons), as described by the following two equations. Firm X: MCX = 602 +2.1 Rx dollars per day Firm Y: My = 934 + 2.5Ry dollars per day where Rx and Ry are the quantity of pollution reductions (in tons of the two firms respectively. When polllution is not regulated, the two profit maximizing firms will spend no effort in pollution reduction, and hence generate the following quantity of pollution. Fimm X: 261 tons Firm Y: 201 tons Now, the government would like to reduce the overall pollution by hull by issuing tradable pollution permits of 276 tons, with 130,5 tons allocated to Firm X and 145.5 tots allocated to Firm Y. Under the pollution permit scheme, a firm will be allowed to generate q tons of pollution only if the firm has pollution permits of q tons. Suppose these permits are perfectly divisible and the negotiation cost to reach an agreement between the two firms is zero. 67. We would expect Firm X to produce Answer67 tons of pollution. 68. We would expect Firm Y to produce Answer 68 tons of pollution

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