Suppose that the inverse demand curve for iced tea is given by p=7012q

where p is the price per bottle paid by consumers and q is the number of bottles purchased by consumers.

Iced tea is supplied to consumers by a monopolistic distributor who buys from a monopolistic producer, who is able to produce iced tea 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 in order to maximize his revenue. How much will consumers pay for iced tea?