Consider the following two options for decreasing the amount of a pollutant that a factory discharges: A) The IRS monitors a machine that measure...

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1. Consider the following two options for decreasing the amount of a pollutant that a factorydischarges: A) The IRS monitors a machine that measure the quantity of pollutant that comes out of thefactory and charges the firm a tax per unit of the pollutant generated. B) The government sets a maximum amount of the pollutant the firm can emit. A governmentagency monitors the firm and imposes a large fine if they go over the maximum level of the pollutant.’ a) Which of these two policy would an economist consider superior? Why? (1 point) b) Consider a politician who realizes that the only people who care about this issue areenviornentalis and firms producing the pollutant. Why might a politician in this position choose policyB over policy A? (2 points) 2. For each of the following situations the individuals will be in favor of anything that gives them apositive net benefit. Consider which (if any) of the projects that will be approved if (i) There is simplemajority voting and (ii) People can get together and make credible and binding agreements on how tovote. It each case. discuss whether the outome is the right outcome for the economy: (2 pointseach) Project A B CValue to1 -200 250 -3002 1 00 -50 -1003 -50 -300 350Project D E FValue to1 1 00 -50 -4O2 40 -20 -1O3 -200 -1 00 75 3. Use the theories of rent extraction and rent creation to discuss how the Texas Legislature mightthink about legalizing marijuana in the state of Texas. (3 points)