PS5.4.6See attached photo for original scenario. Now suppose that the government of Mass. offers solar subsidies to 10 bicycle manufacturers. These subsidies are for $80 and the manufacturers revive subsidies as long as they construct a bicycle manufacturing plant using newly-invented solar tech (I.e technology 1 referenced in attachment). The long run price, now that there are 10 bicycle manufacturers using tech 1, will remain at p* =17. There is still free entry for firms using tech 2. Question 1: what quantity will be produced by each firm using technology 1 (q1)?Question 2: what quantity will be produced by each firm using tech 2 (q2)?Question 3: in equilibrium, how many firms using tech 2 will there be in the market(N2)?

Despondent over the Red Sox's terrible season, Prof. Gruber decides to quit his day job and start a bicycle manufacturing firm in Kendall Square. As he starts looking into the bicycle manufacturing industry, he realizes it has some interesting features. First, he realizes that it operates as a competitive industry. Second, he finds that there are two technologies used by firms in the industry. Technology 1 uses solar power, and has a cost function C' (q) = q + 4q' + 32 for q > 0. Technology 2 uses electricity from the grid and is more efficient, with a cost function C (q) = q + 2q' + 32 for q > 0. Assume that we are in the long run, so firms using both technologies can shut and leave the market at 0 cost, so that C (0) = 0 for both technologies