1.1.The daily market demand for boxes of paper clips in the United States is Q_D = 10 - 2P.The daily market supply for boxes of paper clips is Q_S = 5 + 3P, where P is the price of a box of paper clips and Q_D and Q_S are thousands of boxes of paper clips. There are many producers and buyers of paper clips.

a.Adam Smith Pins produces and sells boxes of paper clips.Adam Smith Pins marginal cost for producing a box of paper clips is MC = 0.002q, and its average variable cost for producing boxes of paper clips is AVC = 0.001q, where q is the actual number (not thousands) of boxes of paper clips Adam Smith Pins produces.Adam Smith Pins daily fixed cost for producing boxes of paper clips is $200. (Note: in your calculations market demand and market supply quantities Q are in thousands e.g., Q = 8 is 8,000, and Adam Smith Pin quantities q are the actual number e.g., q = 35 is 35)

i.What price does Adam Smith Pins charge per box of paper clips? (4 points)

ii.How many boxes of paper clips does Adam Smith Pins sell per day? (3 points)

iii.How much profit per day does Adam Smith Pins make from producing and selling their boxes of paper clips? (4 points)

iv.Should Adam Smith Pins continue producing and selling paper clips? Why or why not? (3 points)

b.The paper clip manufacturers of India have developed a new production process for paper clips. They can sell their paper clips anywhere on the global market, including transportation, for an average of 54 INR (Indian rupee) per box of paper clips. The current exchange rate is $1 = 75 INR.How many, if any, boxes of paper clips are imported in to the U.S.? (4 points)

c.Does Adam Smith Pins continue producing paper clips now that Americans can buy India-made paper clips? (3 points)

d.Because of a growing economy in India, exports to India from the U.S. are growing, causing the value of the dollar relative to the Indian rupee to increase from 75 INR to 85 INR per $1.How many boxes of paper clips are now imported, if any, by the U.S. from India, with the Indian price per box of India-produced paper clips remaining at 54 INR? (4 points)

e.Adam Smith Pins is purchased by Hunter Biden.He convinces President Biden to give Adam Smith Pins the monopoly on making paper clips in the United States and to prohibit the import of any foreign paper clips.

i.What is the new market price and how many boxes of paper clips are now sold in and purchased by the U.S. market each day? (Note: In calculating market price, now that Adam Smith Pins is the only supplier to the market, both Adam Smith Pins quantity produced and the quantity demanded by the market are in thousands of boxes.For example, if your answer for Q = 8, use 8 in calculating market price.However, in calculating Adam Smith Pins' cost and profits, you will use q = 8,000.) (4 points)

ii.How much profit does Hunter Biden's Adam Smith Pins make per day? (3 points)