Suppose that recycled and virgin aluminum are perfect substitutes. The demand for aluminum is given by P = 3000 - 2Q, where Q = QV + QR. The supply of virgin and recycled aluminum is given by MCV = 500 + 2QV and MCR = 800 + 0.5QR, respectively. Assume that quantity is expressed in units; price and MC are in dollars per unit.
a) How many units of recycled and virgin materials should be used? Calculate the efficient recycling ratio.
b) Illustrate your answers to (a) on a clearly labeled diagram.