1 10 Pts Suppose That The Salt River Project Srp Has A Acquired A Large Amount Of La 2574103

1. (10 pts.) Suppose that The Salt River Project (SRP) has a acquired a large amount of land on the outskirts of the Phoenix Metropolitan Area and is deciding between i) constructing a large-scale solar farm or ii) creating a nature preserve. The solar farm would generate 500 megawatts of electricity but would take 2 years to construct and generate considerable traffic, noise, and air pollution for nearby residents during that time. The nature preserve would plant a variety of native vegetation to provide provide new habitat for local wildlife. Currently, the land is vacant but lacks any vegetation. If SRP decides to build the solar farm (instead of the preserve) what is included in the opportunity cost? Explain 2. (25 pts.) Supply and demand analysis. a) Suppose the market for Nissan’s electric cars is currently in equilibrium. Suddenly, Tesla announces that they will drop the price of all their electric cars by 20%. What happens to the price and quantity of Nissan’s electric cars in the new equilibrium? Draw a graph with the initial equilibrium price and quantity and the new equilibrium price and quantity. Explain your answers. Document Preview:

SOS 325S 2018Problem Set #2Answer all questions and turn in by the end of class on February 22nd. You may also submit yourassignment via Blackboard, but it must be uploaded before the end of class on the 22nd. Do NOT emailyour problem set to me or the TA. Make sure that your answers are clear, legible, and concise.1. (10 pts.) Suppose that The Salt River Project (SRP) has a acquired a large amount of land on the outskirtsof the Phoenix Metropolitan Area and is deciding between i) constructing a large-scale solar farm or ii) creating anature preserve. The solar farm would generate 500 megawatts of electricity but would take 2 years to constructand generate considerable trac, noise, and air pollution for nearby residents during that time. The nature preservewould plant a variety of native vegetation to provide provide new habitat for local wildlife. Currently, the land isvacant but lacks any vegetation. If SRP decides to build the solar farm (instead of the preserve) what is includedin the opportunity cost? Explain2. (25 pts.) Supply and demand analysis.a) Suppose the market for Nissan’s electric cars is currently in equilibrium. Suddenly, Tesla announces thatthey will drop the price of all their electric cars by 20%. What happens to the price and quantity of Nissan’selectric cars in the new equilibrium? Draw a graph with the initial equilibrium price and quantity and the newequilibrium price and quantity. Explain your answers.1b) Suppose the market for Apple Watches is currently in equilibrium. Then, workers at Apple’s factories goon strike and demand a wage increase. This raises the cost of producing each Apple Watch. What happens toprice and quantity for Apple Watches in the new equilibrium? Draw a graph with the initial equilibrium price andquantity and the new equilibrium price and quantity. Explain your answers.c) Suppose ASU increases the price of admission to ASU Basketball games. How does this aect the demandfor basketball tickets?…