Bill is a student obsessed with stationery. Bill gets utility only from Mechanical Pencils (MP) and legal Note Pads (LP). Bill only purchases BIC brand Mechanical Pencils and APP brand legal Pads. He purchases these goods at the Marvin Center bookstore. Bill has $24.00 to (M=24) spend; the price of a Mechanical Pencil is $2.00 (PMP=2), and the price ofa legal Pad is $4.00 (PLp=4). 7K4) What conditions must hold if Bill is maximizing his utility? When Bill maximizes his utility, he consumes four (4) legal Pads (LP) and four (4) Mechanical Pencils (MP). 3X4} Construct a consumption diagram findifference curve etc. 7 with Mechanical Pencils (MP) on the horizontal axis and Legal Pads (LP) on the vertical axis. (Label all points, lines, etc.) On the last day of class, the George Washington Bookstore offered a clearance special. The price of a Mechanical Pencil (MP) was only $1.00 (PMP=1) while the price of a legal Pad (LP) remained at Sal-.00 (PLp=4). Bill's utility maximizing consumption bundle for the last day of class was three (3) legal Pads (LP) and twelve (12) Mechanical Pencils (MP). 9)(4) Construct another consumption diagram using the information from question 8 and the new consumption bundle from the last day of class. Put Mechanical Pencils (MP) on the horizontal axis and legal Pads (LP) on the vertical axis. That is. show the effect of changing from the regular price to the clearance price on the same diagram. (Label all points, lines. etc.) 10)(6} Find the giuation for. and gag, Bill's demand curve for Mechanical Pencils(MP). (Assume the demand curve is a straight line.) 11)\") Find the Price Elasticity of demand for Mechanical Pencils (MP) using the demand curve from question 10. Use the prices provided above ($1.00 and $2.00) to calculate the Price Elasticity. Categorize the price elasticity you calculated. Consider the market for Smart Watches. 12)(4) Is the market for Smart Watches perfectly competitive? Why? Regardless of your answer to question 12, assume the Smart Watch market is properly modeled using the perfectly competitive model. The (inverse) market demand for Smart Watch is l P = 24 Q 3 and the supply curve is given by l = Q 6 13)(4) Find and Graph the equilibrium price and quantity in the market for Smart Watches. The government considers imposing a tax of $4 per Smart Watch. 14)(4} Find and sketch the proposed tax's post-tax equilibrium 1 5)(4) What would be the incidence of the tax on the consumer and the producer? 16)\") Identify any deadweight loss because of this tax on your diagram from question 14.Wl1at would be the value of any deadweight loss to welfare? Continuing with the Smart Watch market, the government decides not to impose any tax. A rm in the Smart Watch industry has a total cost curve of TC = 24 + 3 Q 3 And correspinding marginal cost of MC = 1 Q 3 13(4) Find the quantity and cost at the lowest point of the average total cost curve (minimum efcient scale) for a rm in the Smart Watch industry. 18)(4) Given the above costs and market, how many (identical) firms would be in the perfectly competitive market described above?[Recall from last section that the market demand is P224 l/3Q] 19)[10) Instead of perfect competition, assume that there is a Smart Watch monopolist, Apple, in the market. Using the cost structure from above and the market demand curve nd, and graph, the prot, consumer surplus, and [long-run} deartweight loss generated by Apple in the Smart Phones market. 20)\") According to the information you have to work with above, is the market for Smart Watches properly considered a Natural Monopoly in the long run? Why? 21)(4) As a graduate student I was employed in the summer as a research assistant for Professor Olsen. Professor Olsen is an established sociologist who teaches at American University and writes well-received books and articles. Professor Olsen hired me to do typing for an upcoming Ethnography she is publishing. Professor Olsen is an accomplished typist who types 110 words per-minute. On the other hand, I can type only 35 words per-minute, and I have no knowledge of ethnography. Briey identify, using specrc economic concept[s] we have discussed in class, as to why she hired me even though she can type faster than I can? 22)(4) Disney, an enormous entertainment company, built a theme park in California called Disneyland. Disneyland has been a huge success and has attracted hundreds of millions of visitors since opening. The real estate around the theme park experienced an extraordinary increase in value since the opening of Disneyland. The price of this real estate is high because of the huge demand for hospitality services hotels and restaurants because of people visiting the theme park. As a follow up to Disneyland, Disney built an East Coast theme park named Disney World. Unlike the parcel of land inwhich Disneyland is build, Disney purchased tens of thousands of acres surrounding the land on which they intended to, and eventually did, build the new theme park. What specic economic phenomenon we discussed in class caused the real estate market to increase so dramatically around the California theme park? How did Disney handle this \"problem\" in planning and developing subsequent theme parks? 23nd] In the spring of 20l5 after binge watching Netix for seven consecutive nights with my (former) ancee Morgan I told her I wanted to play cards with \"the boys.\" She said, \"You don't like spending time with me! You don't love me anymore!\" I tried to respond to her accusation. While I was telling her that \"I do - in fact -- still love you and I don't want to spend another night with you because. . ." Morgan's rage overcame her and she hit me in the head repeatedly with a little-league Louisville Slugger. (I never quite recovered.) I had erroneously assumed that Morgan would be familiar with some of the basic tenants of economics. What specic economic principle did she not understand