Business
Business, 21.02.2020 18:53, jwbri

Two firms, Gene's Gloves and Wally's Wallets, have factories near a lake. Both firms use a chemical for tanning leather. Some of this chemical runs into the lake. Each year Gene's Gloves dumps 15,000 gallons of the chemical and Wally's Wallets dumps 25,000 gallons of the chemical into the lake. A new study has found that fish and other wildlife are negatively impacted by this chemical. The government has decided to cap the total combined amount of the chemical that the factories can dump into the river at 10,000 gallons/year. For an addition $1/gallon, Wally's Wallets is able to substitute each gallon of harmful chemical for one gallon of a harmless alternative. Gene's Gloves needs to use the harmful but more effective chemical to produce gloves. It costs $3/gallon to safely dispose of the harmful chemical. Assume that Gene's Gloves and Wally's Wallets maintain the same level of production under the new environmental restrictions. Suppose the government gives each firm the right to dump 5,000 gallons/year. If the firms cannot buy or sell these dumping rights, what is the total cost to both firms for complying with the regulation?

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Two firms, Gene's Gloves and Wally's Wallets, have factories near a lake. Both firms use a chemical...

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