Question

The manager of a home appliance company, where welding is a very common operation, is concerned that too much pollution in the work place may be negatively affecting employee morale. The manager believes that he may be able to increase labor productivity and therefore net revenue by reducing air pollution in the factory. He hired an economist to estimate the costs and benefits of reducing pollution that requires installing additional capital equipment. According to the economist, the total cost and total benefit of reducing pollution are represented by the following functions: TB = 170P – P2 And TC = 100 – 10P + 2P2 Where P represents reduction of pollution in the factory. (5 pts each) a. How much pollution reduction should the company undertake? b. What is maximum value of net benefit?

Answer 1