ECO Problem – Portland Fluid Control, Inc., (PFC)

ECO Problem – Portland Fluid Control, Inc., (PFC)

Question
  1. 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

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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.

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

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