The Great Southern Paper Company has the following marginal cost schedule for producing pulp:
Quantity (tons) Marginal Cost
1 ......................... $18
2 .......................... 20
3 .......................... 25
4 .......................... 33
5 .......................... 43
Pulp can be bought in the open market for $25 per ton. The marginal cost of converting pulp into paper is MC = 5 + 5Q, and the demand for paper is P - 135 - 15Q. Calculate the marginal cost of paper if the company produces its own pulp. What is the profit-maximizing quantity? Should the company purchase pulp from the outside or produce it in-house?