Cheap Talk is one of many cellphone producers in a perfectly competitive industry, producing homogeneous phones of equal quality. A new marketing executive at the company proposes that they provide a warranty to buyers to repair any damaged phone, as a way to distinguish their product, attract more customers and increase profits. (Other firms in the industry do not provide such warranties.) Data show that Cheap Talk phone owners on average pay $50 in repair costs over the life of the phone, so the executive recommends that Cheap Talk raise their price by $50 to cover the cost of providing the warranty. What will happen to Cheap Talk's profits if they follow this strategy? Explain your reasoning using economic concepts: