Estimating the cost of removing pollution

Reference no: EM1315948

The demand for polished bronze is given by P = 100 - Q/2. Production of polished bronze is controlled by Bronze Inc, who has a monopoly on the process. BIs marginal costs are given by MC = 10 + Q, with Q measured in kilograms. Mercury is used in the production process and BI pours the used mercury into the local river. Each kilogram of polished bronze produces one gram of mercury. It costs the local town $2 per gram to clean the mercury from the river before the water is fit to drink and wash in. In other words, the marginal social cost of the mercury pollution is $2.

Identify BIs profit maximizing output and price. What is the cost to the town of removing the mercury pollution?

Reference no: EM1315948

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