The market supply and demand for solar panels are given respectively by QS = 80P – 5,000 and QD = 65,000 – 20P, where P is price per solar panel and Q measures the quantity of solar panels. Suppose the government provides a £100 subsidy per solar panel. A. Calculate the price and equilibrium quantity before the government subsidy. B. Calculate the post-subsidy equilibrium quantity, the prices consumers pay and the price producers receive C. How much does the subsidy program cost the government?

Economics:
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Author:BOYES, William
Publisher:BOYES, William
Chapter19: Using Economics To Understand The World Around You
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Problem 9E: The United States government subsidizes many so-called green companies. For instance, it has given...
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The market supply and demand for solar panels are given respectively by QS = 80P – 5,000 and QD = 65,000 – 20P, where P is price per solar panel and Q measures the quantity of solar panels. Suppose the government provides a £100 subsidy per solar panel.

A. Calculate the price and equilibrium quantity before the government subsidy.

B. Calculate the post-subsidy equilibrium quantity, the prices consumers pay and the price producers receive

C. How much does the subsidy program cost the government? (3%)

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