Calculate the simplified equation for net marginal benefits

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Reference no: EM13183688

The state of Connecticut is well known for its almandine garnet. The Almandine Garnet Mine has plans to extract 80 tons over the next two years. The production benefits and costs are:

MB = 40 ? 0.1Q MC = 36 + 0.25Q

Assume a discount rate of 5%.

a) Calculate the simplified equation for net marginal benefits (NMB), using the equation of the line format as shown for MB and MC above:

NMB = Spell check

b) What is the profit maximizing quantity the firm should extract in year 1 and year 2?

Reference no: EM13183688

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