f) g) 11) Calculate the profit maximizing price P1; and number of panels 0″; that Solaris will choose to sell to residential clients, as well
f) g) 11) Calculate the profit maximizing price P1; and number of panels 0″; that Solaris will choose to
sell to residential clients, as well as the firm’s profit Hf . (10 points) Use a diagram to illustrate the producer surplus PSR that Solaris enjoys, the consumer surplus of the
residential clients CSR, and the deadweight loss DWLR in the residential market. Then, compute CSR
and DWIR. (10 points) The government wants to encourage the production of solar panels for the residential market. In
order to do so, it is willing to give to the monopoly a subsidy of 5 per panel, but the government
wishes to calibrate this subsidy such that Solaris would supply an efficient quantity (that is, the same
quantity as the one produced under perfect competition) in the residential market. Assuming that the
government knows the demand and the costs that Solaris has, compute how much the subsidy s Solaris is the sole supplier of solar panels in Sunnylandia. Solaris has no fixed costs and can supply solar panels at a constant marginal cost MC of $10 per panel. There are two different categories of customers of solar energy, business and residential. The businesses’ demand for solar panels is QB(P) = 240 – 3P. The residential demand for solar panels is QR(P) = 80 – 5P.
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