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A competitive firm pollutes the air. The following graph shows the demand for th...

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A competitive firm pollutes the air. The following graph shows the demand for the firm’s product and the private and social marginal cost curves. The numbers in the graph represent areas measured in dollars.

Suppose that there are no transaction costs, that there is no legal penalty for polluting, and that it is impossible for the neighbours to move. According to the Coase Theorem, a deal would be struck between the firm and the neighbours to produce  __________  units of output, thereby generating an additional gain of  __________  to the society.

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