The table below provides information about costs and benefits from the production of

Question

pesticides that pollutes a lake used by a trout farmer
TP of pesticides/
week
Pesticides
producer Mc
Marginal external
costs
Marginal Social
benefits
0 0 0 250
1 5 33 205
2 15 67 165
3 30 100 130
4 50 133 100
5 75 167 75
6 105 200 55
7 140 233 40
If no one owns the lake and if there are no regulation of pollution, what is the quantity
of pesticides produced per week and what is the marginal cost of pollution borne by
the trout farmer
b) If the trout farm owns the lake, how much pesticides is produced per week and what
does the pesticides producer pay the farmer per tonne
c) If the pesticides producer owns the lake, and if a pollution free lake rents for $100 a
week, how much pesticides is produced per week and how much rent per week does
the farmer pay the pesticides producer for the use of lake
d) Compare the quantities of pesticides in parts b and c and explain the relationship