Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 31

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. What effect do such subsidies have on the adoption of such alternative technologies? Is this the best way to foster such alternatives? How might the fact that a particular technology is subsidized affect whether peoples' choices of technologies are efficient in the sense described in Figure?
FIGURE Construction of an Isoquant from Engineering Data
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 q 0. The q 0 isoquant reflects various mixtures of the three processes.