A perfect competition firm is producing a chemical fertilizer and is locating its factory nearby a river which is also a source of water for the nearby residents. The waste for the factory is polluting the river. An analyst has estimated the marginal benefit, private cost and damage associated to this situation. Those are given as: Faedah Marginal/Marginal Benefit (MB): P = 700 -0.2Q Kos Persendirian Marginal/ Marginal Private Cost (MPC): P = 400+ 0.6Q Kerosakan Marginal/Marginal Damage (MD): P = 0.7Q (a) Calculate the equilibrium output and quantity if the firm does not take into account the pollution. (b) Calculate the equilibrium quantity and price that are desirable by the society. (c) Explain the effect on society if the output is produced at question (b) above. (d) Calculate the effect on question (c) above. (e) Say the government is proposing either to use the Pigouxian tax or subsidy in order to internalize this negative externality. Give your reasoning which method is more appropriate and why it is so based on the amount of tax revenue and subsidy in this case. | (f) Sketch all your answers from question (a)-(e) above in one appropriate diagram.