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1. The two dry-cleaning companies in Collegetown, College Cleaners and Big Green Cleaners, are a major source of air pollution. Together they currently produce 350 units of air pollution, which the town wants to reduce to 200 units. The accompanying table shows the current pollution level produced by each company and each company's marginal cost of reducing its pollution. The marginal cost is constant. Companies Initial Pollution levels (units) Marginal cost of reducing pollution (per unit) $5 $2 College Cleaners Big Green Cleaners 230 120 a. Suppose that Collegetown passes an environmental standards law that limits each company to 100 units of pollution. What kind of a solution is this to the pollution problem? What would be the total cost to the two companies of each reducing its pollution emissions to 100 units? b. How could the state use a tax to solve the problem of pollution in this market? Discuss and show this solution with a hypothetical graph. c. Suppose instead that Collegetown issues 100 pollution vouchers to each company, each entitling the company to one unit of pollution, and that these vouchers can be traded. 1. How much is each pollution voucher worth to College cleaners? To Big Grean Cleaners? (That is, how much would each company, at most, be willing to pay for one more voucher?) ll. Who will sell vouchers and who will buy them? How many vouchers will be traded? ili. What is the total cost to the two companies of the pollution controls under this voucher system? d. Which solution (the one discussed in part a, part b, or part c) is most efficient and why? How could the Coase Theorem be used to solve the problem in Collegetown? e