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3. You are the energy economist for a power company. It has two energy services that can be produced using coal and solar power. The
3. You are the energy economist for a power company. It has two energy services that can be produced using coal and solar power. The total cost of producing q units of energy with coal is Ce(q ) = age. The total cost of using solar for q, is Cs(qs) = bqs, where a and b are constants. Consumers can choose only one type of energy. (a) What are the marginal costs of producing the two types of energy? (b) If the market is perfectly competitive, so there are many firms that can provide power services. How many units of energy should this firm produce with coal? (c) Suppose there is a technology improvement in solar industry so that the cost of using solar decreases. How does this affect the power firm's choice of producing the two types of energy
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