Microeconomic Analysis: Installing Solar Panels IntroductionThe United States government has a plan intended to promote the consumption of solar energy as an alternative energy source (Hoover, et.al, 20012). A company known as 1366 Technologies has received funding from the US government to build a plant to produce photovoltaic solar cells. A number of other solar producers and power companies have received government funding ("under the stimulus funds of the American Recovery and Reinvestment Act of 2009") in the amount of twelve billion dollars to build sixteen solar projects (Glenn et .al, 2013: 374 ). Government subsidies aim to increase the production of solar panels at affordable prices for consumers. Solar panel manufacturers will apply the latest technology which will result in a significant reduction in the production costs of solar panels. “The company plans to smelt silicon wafers for solar panels directly from the melt of an industrial furnace” in order to save half the cost of otherwise wasted silicon by cutting the block of pure silicon with a saw (Glenn et.al, 2013: 375). Additionally, the company plans to coat the wafers with materials that will improve the panel's performance. The US government intends to increase global demand for solar energy hoping to increase the US market share of solar panels. However, many people still doubt the effectiveness of solar energy as an alternative energy source, both in the present and in the future. Companies intend to charge high prices for products using new technology to produce affordable solar panels and recover the costs of investments in technology in a short period (Smock et.al, 2007). However, the price of the product...... half of the paper ......n Publishing Group.Banerjee, A. , Banerjee, V. & Duflo, E. (2011). “Poor Economics: A Radical Rethink of How to Fight Global Poverty.” PublicAffairs. Donahue, J. D., & Nye, J. S. (2004). “Market-based governance: supply side, demand side, upside and downside.” USA: Brookings Institution Press.Glenn R., Anthony, H. & O'Brien, P. (2013). 'Economy.' Pearson Education.Hoover, E., Eloranta, E., Holmström, J. & Huttunen, K. (2002). “Managing the Supply-Demand Chain: Value Innovations for Customer Satisfaction.” United States: John Wiley & Sons.Smock, D., Rudzki, R. & Rogers, S. (2007). “On-Demand Supply Management: World-Class Strategies, Practices, and Technologies.” USA: J. Ross Publishing.Swann, G. (2009). "The economics of innovation: an introduction". Edward Elgar Publishing. Taylor, J., & Weerapana, A. (2007). 'Economy.' United States: Cengage Learning.