The AMS company recently instituted an in-house sustainability program. The benefits of this program include not only th

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The AMS company recently instituted an in-house sustainability
program. The benefits of this program include not only the benefits
to the environment 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 estimated to be B(Q) = 100Q - 〖2Q〗^2
and C(Q) = 2Q. Graph the marginal benefit and marginal cost curves.
What level of recycling maximizes the gross benefits of recycling?
What level of recycling maximizes the net benefits of recycling?
Which of these levels of recycling is optimal for the AMS company?
Explain your answer and make sure to include the net benefits
generated by your answers to a) and b).
A hotel chain is considering lowering its price by 10% and has
hired a consultant to estimate the elasticity of demand for hotel
rooms. The consultant collected data from an online marketing
survey panel and estimates the parameters of a log-linear demand
function lnQ=a+blnP. The consultant
reports that the OLS estimate for the constant is
a=3.3 and
b=-1.2 for the slope. The
standard errors are 1.4 and 0.8, respectively. The consultant
recommends that the hotel chain should lower the price of rooms by
10% in order to increase revenue.