Q1. Suppose that bargaining as envisioned by the Coase Theorem can take place, and that the homeowners initially hold the right to a pollution-free environment. What quantity of widgets (Q) will be produced per day? Which party will pay the other? What is the range of possible payments i.e., the minimum and the maximum that would be paid?
Q =
Who pays?
Range of payments:
Q2. What is the difference between a production function and an quant? Explain the law of variable proportions with the help of quant.