Despondent over the Red Sox's terrible season, Prof. Gruber decides to quit his day job and start a bicycle manufacturing firm in Kendall Square. As he starts looking into the bicycle manufacturing industry, he realizes it has some interesting features. First, he realizes that it operates as a competitive industry. Second, he finds that there are two technologies used by firms in the industry. Technology 1 uses solar power, and has a cost function C1(q)=q+4Q2+32 for q>0. Technology 2 uses electricity from the grid and is more efficient, with a cost function C2(q)=q+2Q2+32 for q>0. Assume that we are in the long run, so firms using both technologies can shut and leave the market at 0 cost, so that C(0)=0 for both technologies. Now, suppose that the government of Massachusetts offers solar subsidies to 10 bicycle manufacturers. These subsidies are for $80 and the manufacturers receive these subsidies as long as they construct a bicycle manufacturing plant using the newly-invented solar technology (i.e. technology 1). Determine the new MC, AC, and supply curve for the solar technology with the subsidy. E5)MC1(q)= a) 1+4q+32/q b)1+8q c)1+2q-48/q d)1+4q e)None of the above E6)AC1(q)=? a)1+4q-48/q b)1+2q-32/q c)1+4q+48/q d)1+2q+32/q e)None of the above E7)Q1(p)=? a)1-p/8 b)p-1/8 c)1-p/16 d)p-1/16 e)None of the above E8)The long run aggregate supply curve in this market (i.e. the total amount supplied by all firms as a function of price) depends on whether the price is less than 17. For p

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Despondent over the Red Sox's terrible season, Prof. Gruber decides to quit his day job and start a bicycle manufacturing firm in Kendall Square. As he starts looking into the bicycle manufacturing industry, he realizes it has some interesting features. First, he realizes that it operates as a competitive industry. Second, he finds that there are two technologies used by firms in the industry. Technology 1 uses solar power, and has a cost function C1(q)=q+4Q2+32 for q>0. Technology 2 uses electricity from the grid and is more efficient, with a cost function C2(q)=q+2Q2+32 for q>0. Assume that we are in the long run, so firms using both technologies can shut and leave the market at 0 cost, so that C(0)=0 for both technologies. Now, suppose that the government of Massachusetts offers solar subsidies to 10 bicycle manufacturers. These subsidies are for $80 and the manufacturers receive these subsidies as long as they construct a bicycle manufacturing plant using the newly-invented solar technology (i.e. technology 1). Determine the new MC, AC, and supply curve for the solar technology with the subsidy. E5)MC1(q)= a) 1+4q+32/q b)1+8q c)1+2q-48/q d)1+4q e)None of the above E6)AC1(q)=? a)1+4q-48/q b)1+2q-32/q c)1+4q+48/q d)1+2q+32/q e)None of the above E7)Q1(p)=? a)1-p/8 b)p-1/8 c)1-p/16 d)p-1/16 e)None of the above E8)The long run aggregate supply curve in this market (i.e. the total amount supplied by all firms as a function of price) depends on whether the price is less than 17. For p

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions