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2. LLE can also produce a lower quality battery, the Cub, which lasts significantly less than the Wolf. The Cub can be obtained by altering

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2. LLE can also produce a lower quality battery, the "Cub," which lasts significantly less than the Wolf. The Cub can be obtained by altering the acidity of a "Wolf battery. The alteration process costs $3 per unit, thus the cost of producing a Cub is $13 per unit. The heavy users are willing to pay $26 for a Cub, while the light users are willing to pay $25 for a Cub. The following table summarizes the information given so far "Cub" upgrade to "Wolf" # of users Heavy Users $26 $24 1000 Light Users $25 $5 2000 Marginal Cost $13 $3 Note: the table represents the marginal values and marginal cost for quality. For example, the Heavy users are willing to pay $26 for a Cub and $24 for upgrading the Cub to a Wolf. Thus they are willing to pay a total of $26 + $24 = $50 for a Wolf. What batteries should LLE offer, and at what prices, in order to maximize its profit? (a) $25 for a Cub, and $49 for a Wolf (b) $26 for a Cub, and $49 for a Wolf (c) $50 for a Wolf and no Cub, because Cubs cost more and are valued less by all users (d) $26 for a Cub, and no Wolf

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