[The drainage of waste products from the chemical factory, Ultra Chemicals, situated along the banks of the Misty River has led to the formation of a dead zone in the river that cannot support aquatic life.]

1. [Without any government intervention, will Ultra Chemicals produce a socially optimal quantity? Why or why not? Explain or with the help of a suitable diagram.(5 marks)]
2. [Does Ultra Chemicals impose a deadweight loss on society? Explain Use your diagram to show the deadweight loss to society.(3 marks)]
3. [How can a government intervene to improve upon the outcome from society's point of view? Explain, Diagram not needed.(2 marks)]