Suppose That in Problem 2, the Demand Curve for Mineral

question 8

Multiple Choice

Suppose that in Problem 2, the demand curve for mineral water is given by p = 20 - 16q, where p is the price per bottle paid by consumers and q is the number of bottles purchased by consumers. Mineral water is supplied to consumers by a monopolistic distributor, who buys from a monopolist producer who is able to produce mineral water at zero cost. The producer charges the distributor a price of c per bottle, that will maximize the producer's total revenue. Given his marginal cost of c, the distributor chooses an output to maximize profits. The price paid by consumers under this arrangement is

• A) $10.
• B) $15.
• C) $1.25.
• D) $.63.
• E) $5.

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Definitions:

Shortsightedness

A common vision condition, also known as myopia, wherein distant objects appear blurry while close objects can be seen clearly.

Cheating

Acting dishonestly or unfairly to gain an advantage, especially in a competitive situation or examination.

Honest Fashion

The practice of presenting oneself or creating designs in a manner that is transparent, ethical, and devoid of deception.

Representativeness Heuristic

A cognitive shortcut that involves judging the likelihood of an event based on how closely it resembles the typical case.