Final answer:
According to the Coase Theorem, the optimal solution in the given scenario is for Asarta Inc. to compensate the fishermen $8,500, which is greater than their usual earnings from fishing, while still being less than Asarta's benefit from polluting.
Step-by-step explanation:
The Coase Theorem suggests that if property rights are well-defined and transaction costs are low, parties will negotiate to reach an efficient outcome regardless of the initial allocation of rights. In the scenario with Asarta Inc. and the fishermen, the theorem would suggest negotiating a solution in which resources are used in the way that maximizes total value.
Given that Asarta Inc. has the rights to the stream, the optimal solution according to the Coase Theorem would likely be the one in which Asarta compensates the fishermen for the lost trout earnings but does so at a cost lower than the benefit they receive from polluting. So, option (a) where Asarta Inc. could pay the fishermen $8,500 and keep polluting is the optimal solution. This is because the fishermen gain $500 more than their usual earnings, and Asarta Inc. still benefits since the payment is less than their $40,000 benefit from using the stream.
However, it's important to note that real-world applications of the Coase Theorem may be more complex due to externalities, legal constraints, or other market failures.