Suppose That the Demand Curve for Mineral Water Is Given

Multiple Choice

Suppose that the demand curve for mineral water is given by p = 50 - 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 monopolistic producer, who is able to produce mineral water at zero cost.The producer charges the distributor a price of c per bottle.Given his marginal cost of c per unit, the distributor chooses an output to maximize his own profits.Knowing that this is what the distributor will do, the producer sets his price c so as to maximize his revenue.The price paid by consumers under this arrangement is

A) $3.13.
B) $12.50.
C) $37.50.
D) $25.
E) $1.56.