Suppose a product can be produced using virgin ore at a marginal cost given by MC 1
Question:
Suppose a product can be produced using virgin ore at a marginal cost given by MC1 = 0. 5q1 and with recycled materials at a marginal cost given by MC2 = 5 + 0. 1q2.
(a) If the inverse demand curve were given by P =10 - 0. 5(q1 +q2), how many units of the product would be produced with virgin ore and how many units with recycled materials?
(b) If the inverse demand curve were P = 20 - 0. 5(q1 + q2), what would your answer be?
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a Assume that only virgin ores are used In this case P MC 1 so 10 0 5q 1 0 5q 1 or q 1 10 ...View the full answer
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Related Book For 
Environmental And Natural Resources Economics
ISBN: 9780131392571
9th Edition
Authors: Tom Tietenberg
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