AMS recently instituted an in-house recycling program. The benefits of this program include not only the benefits to the environment of recycling but also the goodwill generated by AMS’s leadership in this area. The costs of recycling include all of the energy, labor, and space required to do the recycling. Suppose these benefits and costs are given by: B(Q) = 100Q – 4Q2 and C(Q) = 5Q. (Note that MB = 100 – 8Q and MC = 5).
a. What level of Q maximizes net benefits (assume partial units are possible)?
b. What is marginal benefit at this level of Q?
c. What is marginal cost at this level of Q?
d. What is the maximum level of net benefits?