Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air
Question:
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 - 10P
How much pollution reduction should Appalachian Coal Mining undertake?
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Related Book For
Managerial Economics Foundations of Business Analysis and Strategy
ISBN: 978-0078021909
12th edition
Authors: Christopher Thomas, S. Charles Maurice
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