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 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?