The government is considering introducing a new training program in North Ryde. You have been asked to evaluate this program. Part of the analysis requires you to derive the supply curve. You observe that at the current market equilibrium, the price of this technology equals $70 and the quantity equals 25 units. After some research you also find that at this equilibrium, the price elasticity of supply is 1.7.

1.Use the price elasticity and market equilibrium to find the supply schedule. Assume that the supply schedule is linear.

2.As part of the program, the government would like you co calculate the net present value of your project (Project A) compared to an alternative project (Project B). The net cash flows for projects A and B are as follows:

year 0 1 2 3 4

ProjectA -10,000 -3,000 5,000 -5,000 30,000

PrkjectB -4,000 -2,000 1,000 6,000 12,000

Use the net present value criterion to decide which project is the most profitable if a discount-rate of 6% is used.