Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $.25 per kwh (kilowatt hour, a unit of power). Draw 2graphs, one to represent the market (supply and demand), and one to represent a single firm (demand, marginal cost, and average cost curves). Assume a u-shaped average cost. Show the equilibrium price and the quantity produced by the market (Q) and by each individual firm (q).Next, to encourage conservation, Congress taxes all forms of energy EXCEPT solar power, causing an increase in the demand for solar. Show what happens to the market and the firm in the short run; indicate clearly what happens to price, quantity, and profit.What happens to the market and the firm in the long run? Indicate clearly what happens to price, quantity, and profit, for each the market and the firm. **Exploring the Market for Solar Power: An Educational Analysis**Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $0.25 per kWh (kilowatt hour, a unit of power).1. **Graphical Analysis:** - **Market Graph:** Draw supply and demand curves for the overall market. - **Firm Graph:** Draw a graph for a single firm, including demand, marginal cost (MC), and average cost (AC) curves. Assume the average cost curve is U-shaped. - **Equilibrium Demonstration:** Indicate the equilibrium price and the quantity produced by the market (Q) and each individual firm (q).2. **Impact of Energy Taxation:** - Congress imposes taxes on all energy forms except solar power to encourage conservation, which increases demand for solar power. - **Short-run Effects:** - Market Price and Quantity: Indicate changes in price and quantity. - Firm Impact: Highlight changes in price, quantity, and profit for individual firms.3. **Long-run Market Adjustments:** - **Post-Adjustment Analysis:** - Examine how the market and firm adjust over the long term. - Clarify changes in price, quantity, and profit for the market and individual firm as the industry reaches a new equilibrium. This analysis facilitates a comprehensive understanding of solar power market dynamics under government policy changes.

"Since you have asked multiple parts, we will answer only first two parts for you. If you want other parts to be answered then repost the question and mention it." Under perfect competition, price determination takes place at the level of market while every firm behaves as a price taker. It produces a quantity depending upon its cost structure. In the long run, all the input factors are variable for the production. And with that, the cost is also variable and no fixed cost. In the long run, firms enter and drag the profit of the market down. The equilibrium price and quantity is determined at the intersection of market demand and supply, and at a single firm level, the price is given and they produce accordingly to maximize their profit. 1) The graph below shows the market supply (green) and demand (blue). The equilibrium price is P and quantity is Q. Below is the graph of single firm, with demand curve (blue) horizontal. And the red curve is the marginal cost curve. And the yellow curve is the average cost curve. The equilibrium is at point e, where the demand = marginal revenue = marginal cost.2) If Congress taxes all forms of energy EXCEPT solar power, it will cause an increase in the demand for solar in both market and firm level. Below is the graph for a single firm where the demand curve increases from d to d1 and equilibrium quantity and price increases to q1 and P1, respectively. The profit of the firm will also increase in the short run as the quantity produced increases with price. The profit in the short run can be normal, super normal depending on the short run average cost curve. In the market, the demand curve will shift right from D to D1, and there will be an increase in equilibrium price, which will increase the quantity supplied in the market to Q1. Therefore, in the short run, there will be an increase in price and quantity and profit in the short run for the market can be supernormal, normal or loss depending on the short run average cost curve.