The table to the right shows George's, Thomas's, Theodore's, and Buyer Value Abraham's willingness to pay for a painting of a mountain in South George $100 Dakota. On the supply side, the seller has two paintings to sell. Theodore $150 The paintings are sold on a first-come-first-served basis and each Thomas $250 of the four people has an equal chance of being the first or second Abraham $300 to arrive. Suppose that the two pictures are being sold for $75 each.

a. First, ignore the supply and draw the market demand curve for the paintings. Be specific and include the amounts on the axes that correspond to each point on the demand curve. b. Given the demand and the posted price (from above) each of the four consumers wishes to purchase one painting but only two are available. We call this situation a _____________. Each of the four has an equal chance of getting one. List the sample space of this random event and the probability of each outcome. c. What is the probability that Thomas receives a painting? What is the probability that Abraham receives a painting? d. What is the probability that the two people who want the paintings the most are the same two who are able to purchase it. e. Use the complement formula to calculate the probability that at least one of the two who value the painting the least receives a paintings. Show your calculation. f. Use the additive rule of probability to calculate the probability that either Thomas or Abraham or both receive a painting. Show your calculation. g. Suppose that Thomas arrives first and buys a painting. What is the probability that Abraham arrives second and so both paintings go to the people who value them the most? Use the conditional probability formula to solve this problem. Show your calculation. h. What is a market clearing price? (I.e. what price would cause the quantity demanded to equal the quantity supplied?) Who would receive the two paintings in this case? Explain your answer. 2