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You have been hired by First Response Pty Ltd, a major supplier of fire protection equipment to provide them with advice on pricing, production and

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You have been hired by First Response Pty Ltd, a major supplier of fire protection equipment to provide them with advice on pricing, production and profit maximisation. The company has recently introduced a new line of re extinguishers that enjoy patent protection. The company CEO has provided the following limited data to assist with you: Table 1: Output and Cost profile for First Response Pty Ltd Total Variable Cost $500,000 $740,000 5 1,060, 000 Total Fixed Cost $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 $8,500,000 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000 The total variable cost function for the new line of extinguishers is given by the following functional form: $500,000 + (x)Q + (y)Q2 The demand for the new line of extinguishers is given by the following function: P = $300- 0.001Q (a) Using Table 1, the functional form for total variable costs and simultaneous equations, and the demand function provided calculate total variable cost, total cost, total revenue, total prot, marginal revenue, average cost, marginal cost, and marginal prot for each level of output (Q) an illustrate your answers in a table. (b) Show how the prot maximising output, price and prot for this rm can be calculated using marginal analysis and show workings. (c) Calculate the optimal prot margin for this rm and show workings. (d) What would the competitive price and competitive output level be in this market? Show workings. (e) Calculate the deadweight loss for the consumer and the producer and the amount of surplus transferred from the consumer to the producer and show workings. (f) Calculate the net gain for the producer by being a monopolist as compared to the competitive market outcome and show workings

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