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1. (12 marks) Consider the case of a chemical factory that dumps its pollutants into a nearby river and a fishery that harvests salmon from this river. The chemical factory's marginal abatement cost is MAC = 150 - 3E and the marginal damages (measured in terms of lost fish) is MD = 2E. Suppose the government assigns the property right the fishery. For the following calculations show your work. a) Calculate the negotiations between the chemical factory and fishery that would achieve a socially efficient level of emissions. Illustrate on a diagram. b) Calculate (i) the gain to the fishery after negotiations and (ii) the gain to the chemical factory after negotiations. Illustrate on your diagram. c) Does it matter whether the regulator assigns the property right to the fishery or the chemical factory? Briefly explain