Question: Please help with this question. Thank you. There are two firms in the economy. Firm 8 is producing steel and its cost function is: S2

Please help with this question. Thank you.

There are two firms in the economy. Firm 8 is producing steel and its cost function is: S2 cs(s, X) = x where s 2 0 is the amount of steel produced and x Z 0 is the amount of pollution produced. Suppose that the maximal possible amount of pollution is x = 2. Firm F is producing fish and its cost function is: cf(fa x) = f2x where f 2 0 is the amount of fish caught. Suppose that the prices of steel and fish, ps and pf, are both 1. ** Part a (10 marks) Find the optimum choices by f, s, x by Firm F and Firm 8. ** Part b (10 marks) If the Firms are merged together as a single firm, find the optimal choices of f, s, x by this merged firm

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