QUESTION 7 A nature restoration company is currently working on a project which is improving the health of the Great Barrier Reef. The project is estimated to cost $3.1 billion. Aside fram improving the health of the reef, it is expected that the project will have positive impacts on Queensland's tourism, the state and Australian economy. The restoration company is suggesting that part of the cost should be covered by the tourism operators who benefit from the improved health of the reef. Which of the following statements are true: (7] If the marginal value of the healthier reef to the tourism operators, is greater than how much the restoration company wishes to charge them, an agreement with tourism operators to pay part of the cost may be possible. () If the negotiation fees become too high, reducing the benefits of the healthier reef to tourism operators, an agreement for tourism operators to cover some of the cost would most likely not be reached. (1) If tourism operators are able to avoid paying for any restoration costs, either directly or indirectly, it will maximise their surplus (assuming the restoration still goes ahead). [ With thousands of potential tourism operators and the likely involvement of expensive lawyers, Coase's theorem will likely help those involved reach an efficient outcome. QUESTION 6 John runs a swimming school. He has a lot of students but only 10 car parking spaces for the student's parents. Often, the parents use the car parks designated for visitors of the library, which is located next door to the pool. 1. John's swimming school does not produce any negative externality 2. For a socially efficient outcome, John needs to pay for more parking spaces near his pool. 3. The Coase Theorem is a method that could be used to deal with the externality. Which of the above statements are true: O Only 1is true. O Only 2is true. (O Both 1 and 2 are true. (O Both 2 and 3 are true. O All three are true