Question 5 (13 marks). The company Touch Textiles is comidering to dispose its chemical waste into a nearby cit. The chemicals wit affect downstream tih reproduction, creatly reducing the number of the fish will be able to catch in the five At a cont of $200 Touch Tests can the out the time in the chemical waste. By doing this, there would be rolled on the reproduction and fishermen's business would not be wirected the intentands of dollars for the tas involved we listed below With Without Touch Tt 5300 5500 men 550 For comple, Tooth Textiles annot of $500 without the filter Installing the Wher will cout the firm $200. reducing profits down to 5300 Not installing the file wil importa cost of $350 on the fishermen without the the profits will be only 550, whereas the fteri installed the profits will be $400. Touch Textiles and then the only comments affected by the the installation (a) From economic diciency peripective, should the filter be installed? Explain (4) In the menu that there's now requiring Touch Textiles to install the filter and currently there is nothic (1) Are the wing to pay Tough Textiles to all the ther? If so, what is the maximum Fermen we willing to pay Touch Textiles to install the filer? (2) (c) reportations are free will Towel Textiles and the che come to an agreement that results in the fierbinted your answer is the explain why this is the case your www is yes, which party would have to make a payment and what can you say about how much wood the payment be? (4 marks) (a) Woment be poi il negotiations requires a lawyer at a cost of $2007 (3 marks) Question 5 (13 marks). The company Tough Textiles is considering to dispose its chemical waste into a nearby river. These chemicals will affect downstream fish reproduction, greatly reducing the number of fish that fishermen will be able to catch in the river. At a cost of $200, Tough Textiles can filter out the toxins in the chemical waste. By doing this, there would be no effect on fish reproduction, and hence, fishermen's businesses would not be affected. The relevant profits (in thousands of dollars) for the two parties involved are listed below. With Filter Without Filter Tough Textiles $300 $500 Fishermen $400 $50 For example, Tough Textiles earns an profit of $500 without the filter. Installing the filter will cost the firm $200, reducing its profits down to $300. Not installing the filter will impose a cost of $350 on the fishermen: without the filter their profits will be only $50, whereas if the filter is installed, their profits will be $400. Tough Textiles and the fishermen are the only economic agents affected by the filter installation (a) From an economic efficiency perspective, should the filter be installed? Explain. (4 marks) 1 In the remaining parts, suppose that there is no law requiring Tough Textiles to install the filter and currently there is no filter in place. (b) Are the Fishermen willing to pay Tough Textiles to install the filter? If so, what is the maximum Fishermen are willing to pay Tough Textiles to install the filter? (2 marks) (c) If negotiations are free, will Tough Textiles and the fishermen come to an agreement that results in the filter being installed? If your answer is no, then explain why this is the case. If your answer is yes, which party would have to make a payment and what can you say about how much would this payment be? (4 marks) (d) Will an agreement be possible if negotiations requires a lawyer at a cost of $200