The Cost of Controlling Emissions at a Firm Goes Up

Multiple Choice

The cost of controlling emissions at a firm goes up rapidly as the amount of emissions reduced goes up. Here is a possible model: where q is the reduction in emissions (in pounds of pollutant per day) and C is the daily cost (in dollars) of this reduction. Government clean-air subsidies to the firm are based on the formula where q is again the reduction in emissions (in pounds per day) and S is the subsidy (in dollars) . Calculate the net cost function given the cost and subsidy above, and find the value of q that gives the lowest net cost. What is this lowest net cost?

A) q = $2, N ( q ) = $2,300
B) q = $4, N ( q ) = $2,300
C) q = $2, N ( q ) = $4,600
D) q = $2.5, N ( q ) = $2,375
E) q = $2.5, N ( q ) = $2,300