Suppose the Demand Curve for Mineral Water Is Given by P

question 6

Multiple Choice

Suppose the demand curve for mineral water is given by p = 40 - 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 istributor chooses an output to maximize profits.The price paid by consumers under this arrangement is

• A)$2.50.
• B)$20.
• C)$1.25.
• D)$30.
• E)$10.

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