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Uppose the market demand function (expressed in dollars) for a normal product isP = 80 q, and the marginal cost (in dollars) of producing it is MC = 1q, where P is theprice of the product and q is the quantity demanded and/or supplied. A. B. C. D. 3. 4. 5. Suppose you were asked to comment on a proposed policy to control oil spills. Since theaverage cost of an oil spill has been computed as $X, the proposed policy would requireany firm responsible for a spill immediately to pay the government $X. Is this likely toresult in the efficient amount of precaution against oil spills? Why or why not?"In environmental liability cases, courts have some discretion regarding the magnitudeof compensation polluters should be forced to pay for the environmental incidents theycause. In general, however, the larger the required payments the better. " Discuss. Label each of the following propositions as descriptive or normative and defend yourchoice:a. B. C. D. E. 6. How much would be supplied by a competitive market?Compute the consumer surplus and producer surplus. Show that their sum ismaximized. Compute the consumer surplus and the producer surplus assuming this same productwas supplied by a monopoly. (Hint: The marginal revenue curve has twice the slopeof the demand curve. )Show that, when this market is controlled by a monopoly, producer surplus is larger,consumer surplus is smaller, and the sum of the two surpluses is smaller than whenthe market is controlled by competitive industry