AMS recently instituted an in-house recycling program. The
benefits of this program include not only the benefits to the environment of
recycling but also the goodwill generated by AMS’s leadership in this area. The
costs of recycling include all of the energy, labor, and space required to do
the recycling. Suppose these benefits and costs are given by TR(Q)=100Q – 2Q2
and TC(Q) = 2Q (Note that MR = 100 – 4Q , and MC= 2 ).
a. What
level of Q maximizes the profit of recycling?
b. What is
marginal benefit (revenue) at this level of Q?
c. What is
marginal cost at this level of Q?
d. What
level of Q minimizes the total costs of recycling?
e. What
level of recycling is optimal? Why?
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