Recycling bottles

One important motivation for recycling bottles and cans is to reduce litter. Suppose you are given the following facts about the glass bottle industry:

• The demand for tons of bottles is given by Q = 1000 - 10*P.
• The cost of producing bottles from raw materials is $50 per ton.
  
• Litter creates an externality cost of $20 per ton of bottles produced.
• Bottles can be recycled at a MC of $1*X, where X is the tons recycled.

Please answer the following questions:

1. Find the market outcome when firms take prices as given and the industry ignores the litter problem. Find the price, the total quantity of bottles consumed, the amount produced from raw materials, and the amount produced by recycling (if any).
   
2. Explain why the outcome in part (1) is not efficient. Use an appropriate graph to illustrate your explanation. Now calculate the efficient outcome and suggest a specific policy that could move the industry toward efficiency.