The pollution levels for two firms, A and B, are Qa and Qb, respectively, measured in tons per year. Say profit for A as a function of pollution is 25Qa – Qa² / 2 so that the marginal benefits of pollution function is MB_A = 25-Qa. Similarly, profits for B = 40Qb – 2Qb² so that MB_B= 40-4Qb.  How much is each firm going to produce unregulated in the market?

Select one:

a. Qa = Qb = 10 tons

b. 35 tons total

c. Qa = 25 tons; Qb = 10 tons

d. Qa = 50 tons, Qb = 20 tons

Answer rating: 100% (QA)

To find the unregulated production levels for each firm set the ma... View the full answer