A and B live on adjacent plots of land. Each has two potential uses for her land, the present values of each of which depend on the use adopted by the other, as summarized in the table. All the values in the table are known to both parties. B Rental housing Bee keeping Apple growing A: €200 B: €700 A: €400 B: €650 OA: Apple Growing: B: Rental Housing OA: Pig Farming; B: Rental Housing OA: Apple Growing; B: Bee Keeping A: Pig Farming; B: Bee Keeping A Pig farming A: €450 8: €400 a. If there are no negotiation costs, what activities will the two pursue on their land? OA: Apple Growing: B: Rental Housing OA: Pig Farming: B: Rental Housing A: Apple Growing: B: Bee Keeping A: Pig Farming: B: Bee Keeping A: €450 8: €500 b. If there are negotiation costs of €150, what activities will the two pursue on their land?

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