The answer is provided, I have struggled to understand the answer, so please dont just recopying the answer, thank you!

Harry, a monopolist, has a total cost curve given by TC = 5Q + 15. He sets two prices for his product, a regular price, PH, and a discount price, PL. Everyone is eligible to purchase the product at PH. To be eligible to buy at PL, it is necessary to present a copy of the latest newspaper ad to the salesclerk. Suppose the only buyers who present the ad are those who would not have been willing to buy the product at PH. a. If Harry's demand curve is given by P = 20 - 5Q, what are the prot- maximizing values of PH and PL? b. How much economic prot does Harry make? c. How much prot would he have made if he had been forced to charge the same price to all buyers? d. Are buyers better or worse off as a result of Harry's being able to charge two prices? ANSWER; a. Profit isgiven by: n = PHQH + PLQL 5(QH + 0,) 15. Given the demand curve, PH = 20 50,, and PL = 20 5(0),, + (2,) First order conditions: alt20 100 50 50 a\"20 so 100 50 Solving for QH and Qi we find that QH = 1 and Q1 = 1. From the demand curve, PH = 15 and P, = 10 20 P. =15 H P. =10 5 MC=5 QH QL Q 0 1 2 4 b. Profit is given by: It = PH QH + PLQL - 5(QH + QL) - 15 = 15 + 10 -10 - 15 = 0 c. Harry will produce where MR = 20 - 10Q is equal to MC = 5. Harry will produce 1.5 units. The price will be P = 20 - 5(1.5) = 12.5. Harry's profit will be (12.5)(1.5)-5(1.5)-15 = -3.75. d. With a single price, Harry would be forced out of business in the long run, and consumers would lose the surplus they enjoy under the two-price arrangement