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Cost-Benefit Analysis of Pollution Control in Appalachian Coal Mining

Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is:

MC = 40p

Where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction the marginal increase in revenue (MR) is

MR = 1,000 - 10 P

How much pollution reduction should Appalachian Coal Mining undertake?

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M927311

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