Business Economics Essay

Cindy wants to invest in a modernistic affair that involves the adroitness of solar panels. In decree to make an in corpseed decision on this avocation venture, she provide motif to analyse potential kale/loss in the solar panel industry by considering future prospects for this type of business. Cindy similarly inevitably to decide whether she forget invest her own notes or borrow the money to start the business.The threatening growth of the solar photovoltaic (PV) industry is almost certain. When observing the rising equals of coal and inhering gas prices, the decrease of PV system costs, and the organisation patronize of solar technology, the PV market looks to have a operative increase in volume over the following(a) few years. According to solarBuzz, a website dedicated to Solar Power and dynamism, The solar PV industry has reached a precise tipping point, with end-market requisite hitting record book levels almost all(prenominal) quarter. This growth is being driven by star module suppliers and project developers that returned to profitability during 2013, and which have in a flash established highly-effective global sales and marketing networks. (NPD Group, Inc., 2013)The expression also states that demand in Q114 will also achieve record-breaking status, as the strongest first-quarter always seen by the PV industry. (NPD Group, Inc., 2013) The cost of production for solar panels has lessen signifi discounttly. The average cost for tier 1 solar photovoltaic manufacturers is expected to egest 6% during 2014, act the downward trend set in tail end since 2008, bringing the overall cost to a record low of $0.20 per watt, according to the latest research from NPD. (NPD Group, Inc., 2013) kick upstairs consumer incentives include lower utility bills, increased measure credits and higher resale values. Homes with solar-power system using photovoltaic (PV) panels sell for an average of $24,705 more than homes without PV system s, research finds. (Tanaka, 2014)The government holds the concept of solar power and aims to make it a major goose egg 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 medley of tax credits, rebates and other incentives to support energy efficiency, march on the use of renewable energy sources, and support efforts to prolong energy and lessen pollution. (Energy, 2014) I see foursome main factors influencing the price elasticity of demand approachability of close substitutes. ar there many accessible close substitutes for solar panels? The demand will take to the woods to be elastic if Cindy and her customer can hold among the various types of PVs for the same desired feature. Are PVs a necessity or a opulence?Currently, PVs would be considered an elastic form of en ergy because there are other forms of electrical energy (coal/power plants). We once considered personal computers a luxury and they are now a necessity. Perhaps PVs will be viewed the same way in the future. How much of my income will PVs consume?A large 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 leveraging? What is the time horizon when making decisions on PVs? PV systems have productive life cycles of 30-50 years. (Brownson, 2014) A long-life time horizon is said to be elastic.RecommendationsUpon review of various criteria such as elasticity of demand, cost of production, etc, I would encourage Cindy to pursue this business venture. This arena is set to grow exponentially in the future. The fall in solar PV prices as well as other incentives will cause higher demand forinstallation. This will benefi t Cindys new business venture by bringing more installation business and lower input costs. This can be seen in the demand supply 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 bonny 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 unclothe energy subsidy pie.BibliographyBastach, M. (2013, March 13). Most energy tax subsidies go toward green energy, energy efficiency. Retrieved from The fooling 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, may 25). value 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/ word/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 condemnation 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