Q5. Please help me understand how to complete the following question.

S. Correcting for negative externalities - Regulation versus tradable permits Suppose a municipality votes to reduce the combined pollution introduced 53*.- three local companies. Presentiv. each rm creates 4 units oF pollution in the arear tor a total of 12 pollution units. The government can reduce total pollution in the area to 5 uniG lav choosing between the following t.-.'o methods: Methods to Reduoe Pollution 1. The government imposes pollution standards using regulation. 2. The government lSSIJE tmdable pollution permits. The costs Faced bv each rm are diFFerent. so it is more diFFicult for some n'ns to reduce pollution than others. The following table Sl'lG'rlS the cost Faced bv each rm to eliminate each unit of pollution. Assume that the oost of eliminating all 4 units of pollution {that is. reducing pollution Do zero} is prohibitively expensive For all three rms. Cost of Eliminating H've... First Unit of Pollution Second Unit of Pollution Third Unit of Pollution Firm (Dollars) (Dollars) {Dollars} Film A 138 165 220 rm E EDD ?50 1.2DD Fum C '39 15 140 Next, suppose that two govemment oFl'ic'iale proposecl alternative plans that would reduce pollution bv 6 units. Method 1: Regulation The rst government emplovee suggests reducing pollution through regulation. To meet the pollution goal, the government requires each firm to recluoe its pollution by 2 units. Complete the Following table wlrlr the total cost to each rm or' reducing Its pollution by 2 units. Total Cost of Eliminating Two Units of Pollution Firm (Dollars) 5...... :| Firm 3 :| rm C :I \fRegulation Versus Tradable Permits Determine the total cost of eliminating six units of pollution using both methods, and enter the amounts in the following table. (Hint: You might need to get information from previous tasks to complete this table.) Total Cost of Eliminating Six Units of Pollution Proposed Method ( Dollars) Regulation less Tradable Permits more In this case, you can conclude that eliminating pollution is costly to society when the government distributes tradable permits than when it regulates each firm to eliminate a certain amount of pollution