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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.

  1. 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?
  2. If the inverse demand were given by P = 20 - 0.5(q1 + q2), what would your answer be?

 

 

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