Marginal analysis for optimal decisions

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Reference no: EM1348678

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 air problem 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 (MR) is

MR = 1,000 - 10P

How much pollution reduction should should Appalachian Coal Mining undertake?

Reference no: EM1348678

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