Suppose a product can be produced using virgin ore at a marginal cost given by MC 1 0 5 q 1 and with recycled materials at a marginal cost of MC 2 5 0 1 q 2 a If the inverse demand curve were given by P 10 0 5( q 1 q 2 ), how many units of the product would be produced with virgin ore and how many with recycled units b How would this allocation change if the inverse demand function were P 200 5( q 1 q 2 ) instead c Discuss why the allocation in part (a) and (b) is different

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Question: Suppose a product can be produced using virgin ore at a marginal cost given by MC 1 = 0 . 5 q 1 and with

Suppose a product can be produced using virgin ore at a marginal cost given by MC₁= 0.5q₁and with recycled materials at a marginal cost of 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 with recycled units?

b.How would this allocation change if the inverse demand function were P = 200.5(q₁+ q₂) instead?

c.Discuss why the allocation in part (a) and (b) is different?

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