Imagine a CEO retreat in the desert in which CEOs spend hours in a sauna each day and cannot leave the desert between sauna sessions. The folks running the retreat (our firm) sell lemonade after each sauna session. They are a monopoly in the market of refreshments for this CEO camp in the desert. Imagine CEOs at the retreat have the inverse demand function p(Q) = 12000 1000Q for lemonade after using the sauna. Furthermore, the folks running the retreat have the cost-function C(Q) = 1000Q2 + 1000 for lemonade.

A. What are equilibrium price and equilibrium quantity?

B. What is the folks running the retreat's profit at the equilibrium?

C. Prove that this profit level is a global maximum.

D. Show the equilibrium price and equilibrium quantity graphically. Include the inverse demand curve, firm's marginal revenue curve, and firm's marginal cost curve.

E. What are consumer surplus, producer surplus, and deadweight loss at the equilibrium?