Business Economics Essay

Cindy wants to invest in a unexampled argument that involves the installation of solar panels. In order to make an informed decisiveness on this business concern venture, she leave behind contract to review potential put on/loss in the solar panel industry by considering forthcoming prospects for this type of business. Cindy also needs to decide whether she will invest her suffer funds or borrow the specie to start the business.The imminent maturement of the solar photovoltaic (PV) industry is almost certain. When observing the rising address of coal and natural gas prices, the decrease of PV system costs, and the government obligate of solar technology, the PV market looks to have a signifi supportt increase in volume over the next few years. According to SolarBuzz, a website devote to Solar Power and free energy, The solar PV industry has reached a critical tipping point, with end-market exact hitting record levels almost every quarter. This growth is being determin ed by leading module suppliers and project developers that returned to profitability during 2013, and which have this instant established highly-effective global sales and marketing networks. (NPD Group, Inc., 2013)The article also states that fill in Q114 will also achieve record-breaking status, as the strongest first-quarter ever seen by the PV industry. (NPD Group, Inc., 2013) The cost of production for solar panels has decreased significantly. The amount cost for tier 1 solar photovoltaic manufacturers is expected to refund 6% during 2014, continuing the downward trend set in federal agency since 2008, bringing the overall cost to a record low of $0.20 per watt, consort to the latest research from NPD. (NPD Group, Inc., 2013) Further consumer incentives include lower utility bills, change magnitude assess credits and higher resale values. Homes with solar- might system using photovoltaic (PV) panels handle for an average of $24,705 more than homes without PV systems, r esearch finds. (Tanaka, 2014)The government supports the concept of solar proponent and aims to make it a major verve source. Solar power as cheap as coal that is the holy grail of the solar power industry (R. Glenn Hubbard, 2012) Government support includes generous subsidies to the consumer and producers of the PV industry. Government agencies, utilities and others offer a variety of tax credits, rebates and other incentives to support energy efficiency, encourage the map of renewable energy sources, and support efforts to conserve energy and lessen pollution. (Energy, 2014) I see four main factors influencing the price elasticity of demand availableness of close substitutes.Are there many available close substitutes for solar panels? The demand will tend to be elastic if Cindy and her customer can switch among the respective(a) types of PVs for the same desired feature. Are PVs a necessity or a luxury?Currently, PVs would be considered an elastic form of energy because there are other forms of electricity (coal/power plants). We once considered personal computers a luxury and they are this instant a necessity. Perhaps PVs will be viewed the same personal manner in the future. How much of my income will PVs consume?A bear-sized portion of consumers income equals elasticity. What portion of income can your client devote to the cost of solar panels? If it is a large share (elastic), what tradeoffs will client need to consider to make it a worthwhile purchase? What is the time visible horizon when making decisions on PVs? PV systems have productive life cycles of 30-50 years. (Brownson, 2014) A longer time horizon is said to be elastic.RecommendationsUpon review of assorted criteria such as elasticity of demand, cost of production, etc, I would encourage Cindy to travel along this business venture. This sector is set to grow exponentially in the future. The drop dead in solar PV prices as well as other incentives will cause higher demand forinstalla tion. This will benefit Cindys new business venture by bringing more installation business and lower input costs. This can be seen in the demand contribute figureIt also makes good economic sense for Cindy to borrow money for her solar panel business venture as the government provides various subsidies to businesses involved in clean energy. In total, the federal energy tax subsidies will cost more than $16 billion in 2013, up from only $5 billion in 2005. (Bastach, 2013) Cindy can benefit from a piece of the clean energy subsidy pie.BibliographyBastach, M. (2013, March 13). Most energy tax subsidies go toward green energy, energy efficiency. Retrieved from The Daily Caller http//dailycaller.com/2013/03/14/cbo-most-energy-tax-subsidies-go-toward-green-energy-energy-efficiency/ Brownson, J. (2014, May 25). Department of Energy and Mineral Engineering. Retrieved from Penn State University https//www.e-education.psu.edu/eme810/node/593 Energy, U. D. (2014, whitethorn 25). Tax Credits, Rebates, and Savings. Retrieved from Energy.gov http//energy.gov/savings NPD Group, Inc. (2013, December). Solarbuzz. Retrieved from Solarbuzz http//www.solarbuzz.com/news/recent-findings/strong-growth-forecast-solar-pv-industry-2014-demand-reaching-49-gw R. Glenn Hubbard, A. P. (2012). Economics. VitalSouce bookshelf version. Tanaka, S. (2014, May 22). Payback Time for Solar-Power Energy Systems. Retrieved from The Wall Street Journal http//online.wsj.com/news/articles/SB10001424052702304198504579571960667560156?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304198504579571960667560156.html