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Now let's consider the market for a particular vintage designer product, a Louis Vuitton Speedy bag: The Speedy bag has been sold continuously since it was first created in 1930. As a result, the condition of vintage Speedy bags is quite variable. Let's suppose that the bags can be graded in descending order so that the bags in the best condition are graded as A while the bags in the worst condition are graded as E. Also assume that all the Speedy bags on the market are evenly distributed across these five grades. This implies that if we selected a seller at random from the marketplace, it is equally likely that his or her bag is grade A, B, C, D, or E. There are 2000 buyers on the online marketplace for Speedy bags. Each buyer demands a single bag and has the following valuations for the five different grades: Value $2,000 515'\" C $1,000 -_ ssoo $100 There are 1000 sellers on the online marketplace for Speedy bags. Each seller owns a single bag and has the following opportunity costs for the ve different bag grades: This means that if a seller knows that he is holding a grade "A" bag, he must be compensated at least $1,800 in any exchange. You can therefore treat the opportunity costs of each seller like a marginal cost of production. 1.2) Suppose that the market is perfectly competitive, and the condition of each individual bag is observable by both buyers and sellers prior to trade. What is the market outcome for each bag grade? Please make sure to compute and state the equilibrium prices, quantities and economic surplus (i.e. both the consumer and producer surplus) that arise from trade. Also, provide a visual depiction of your result using appropriate demand and supply diagrams. (5 Points) 1.3) Suppose that the market is perfectly competitive, and the condition of an individual bag is unobservable by both the buyer and seller. What is the market outcome? You may assume that buyers and sellers know the overall distribution of bags across the ve condition grades. Please make sure to compute and state the equilibrium price, quantity and economic surplus that arise from trade. Also, provide a visual depiction of your result using an appropriate demand and supply diagram. (5 Points)