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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.

The price and equilibrium quantity of solar panels before a government subsidy of £100 are, respectively, £700 and 55,000. This is derived by equating the supply and demand functions, solving for the price, and then substituting the price into the supply function to find the quantity.

Explanation:

To calculate the price and equilibrium quantity before the government subsidy, you need to equate the market supply and demand for solar panels: QS = QD. Therefore, the equations become 80P - 5,000 = 65,000 - 20P. By solving this algebraic equation, you can find the equilibrium price 'P'.

Adding 20P to both sides will yield: 80P + 20P = 65,000 + 5,000, which simplifies to 100P = 70,000. Therefore, the equilibrium price P is 70,000/100 = £700.

Alternatively, substituting the equilibrium price P into either the supply or demand equation (QD or QS) will result in the equilibrium quantity Q. For example, substitifying P into QS gives us QS = 80 x 700 – 5,000 = 55,000. Hence, the price and equilibrium quantity before the government subsidy are £700 and 55,000 respectively.

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