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Consider a riverside plant making jam which is sold in jars in a competitive market. The...

Consider a riverside plant making jam which is sold in jars in a competitive market. The monthly demand is p=10-0.00002q and the marginal cost is MC=2+0.0002q where q is in cases of jam sold per month. Jam making causes pollution in the river that imposes on another firm a marginal cost of 0.00004q.

How many cases of jam will be produced per month if there are no legal rules that prevent pollution? What will be the price of a case?

If the jam plant is responsible for taking account of pollution costs, what will the new production rate and selling price be?

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