Q1. An apple grower's orchard provides nectar to a neighbors bees, while the beekeepers bees help the apple grower by pollinating the apple blossoms. Use figure 16.2b to elucidate why this situation of dual positive externalities might lead to an under allocation of resources to apple growing also to beekeeping. Elucidate how might this allocation under allocation get resolved via the means suggested by the coase theorem?

Q2. Verify if the process y_k = 0.6y_k-1 - 0.08y_k-2 + e_k has unit root. If it does, modify the coefficient a_2 so that it does not. Suppose if process does not have unit root which modify a_2 so that it has unit root. Draw graphs of both processes with y_0 = 1 also e_k uniformly
distributed on the interval [-0.5, 0.5].