Y5

Crazy Harry, a monopolist, has a total cost curve given by TC = 7Q + 21. 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 Crazy Harry 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 Crazy Harry's demand curve is given by P = 28 7Q, what are the profit-maximizing values of PH and PL? Instructions: Enter your answers as whole numbers. PH: $ PL: $ b. How much economic profit does Harry make? Instructions: Enter your answer as a whole number. $ c. How much profit would he have made if he had been forced to charge the same price to all buyers? Instructions: Round your answer to the nearest penny (2 decimal places). If you are entering a negative number, be sure to include a negative sign (). $ d. Are buyers better or worse off as a result of Harry's being able to charge two prices?