Over the past 30 years, the government has offered a wide variety of incentives for people to install alternative energy devices such as solar collectors or wind power generators. In many cases, these incentives can reduce peoples’ out-of-pocket costs for such devices to less than one-third of their actual market price. (i) What effect do such subsidies have on the adoption of such alternative technologies? (ii) Is this the best way to foster such alternatives? (iii) How might the fact that a particular technology is subsidized affect whether peoples’ choices of technologies are efficient in the sense described in Figure 1?
Over the past 30 years, the government has offered a wide variety of incentives for people to install alternative energy devices such as solar collectors or wind power generators. In many cases, these incentives can reduce peoples’ out-of-pocket costs for such devices to less than one-third of their actual market price. (i) What effect do such subsidies have on the adoption of such alternative technologies? (ii) Is this the best way to foster such alternatives? (iii) How might the fact that a particular technology is subsidized affect whether peoples’ choices of technologies are efficient in the sense described in Figure 1?
Chapter6: Proudction Costs
Section: Chapter Questions
Problem 8SQP
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Question
Over the past 30 years, the government has offered a wide
variety of incentives for people to install alternative energy devices such as solar collectors or wind power generators. In many cases, these incentives can reduce peoples’ out-of-pocket costs for such devices to less than one-third of their actual market price.
(i) What effect do such subsidies have on the adoption of such alternative technologies?
(ii) Is this the best way to foster such alternatives?
(iii) How might the fact that a particular technology is subsidized affect whether peoples’ choices of technologies are efficient in the sense described in Figure 1?
Transcribed Image Text:FIGURE 1 Construction of an Isoquant from
Engineering Data
A
К per
period
B
a
- C
9.
L per period
The rays A, B, and C show three specific industrial processes.
Points a, b, and c show the level of operation of each process
necessary to yield qo. The qo isoquant reflects various mix-
tures of the three processes.
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