Calculate pfcs optimal monopoly priceoutput combination

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Reference no: EM13392140

Portland Fluid Control, Inc., (PFC) is a major supplier of reverse osmosis and ultrafiltration equipment, which helps industrial and commercial customers achieve improved production processes and a cleaner work environment. The company has recently introduced a new line of ceramic filters that enjoy patent protection. Relevant cost and revenue relations for this product are as follows:

TR = $300Q - $0.001Q2

MR = ∂TR/∂Q = $300 - $0.002Q

TC = $9,000,000 + $20Q + $0.0004Q2

MC = ∂TC/∂Q = $20 + $0.0008Q

where TR is total revenue, Q is output, MR is marginal revenue, TC is total cost, including a risk-adjusted normal rate of return on investment, and MC is marginal cost.

?.Compute PFC's optimal monopoly price/output combination.

?.Compute monopoly profits at this profit-maximizing activity level.

A monopolistic firm faces the following demand curve.

Q = 7800 -12 P

This monopoly's cost function has been estimated as follows:

TC = 460,000 + 50 Q

a. What price should this monopoly charge to maximize its profit?

b. What would be its equilibrium profit?

c. What price should it charge if it were to maximize its revenue?

d. What would be its profit if it maximized its revenue?

e. If this monopoly were to behave like a competitive firm, what price should it charge and what quantity should it produce?

f. Would this monopolist still make an economic profit if it were to behave like a competitive firm?

g. What is the break-even quantity of this monopoly?

Reference no: EM13392140

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