Business Economics Essay

Cindy wants to invest in a new business that involves the installment of solar adorns. In order to make an sure decision on this business surmisal, she go out need to review potential service/loss in the solar panel persistence by considering future prospects for this sheath of business. Cindy also needs to decide whether she allow for invest her own funds or borrow the money to start the business.The impending growth of the solar photovoltaic (PV) intentness is almost certain. When observing the rising be of coal and natural gas determines, the lower of PV system salutes, and the g allwherenment take for of solar technology, the PV market looks to check a meaning(a) increase in volume over the next few years. According to SolarBuzz, a website dedicated to Solar Power and expertness, The solar PV industry has reached a critical tipping point, with end-market look at hitting record levels almost every quarter. This growth is being driven by leading module supplie rs and project developers that returned to advantageousness during 2013, and which have now established highly-effective globose sales and marketing networks. (NPD Group, Inc., 2013)The article also states that demand in Q114 testament also achieve record-breaking status, as the strongest first-quarter ever seen by the PV industry. (NPD Group, Inc., 2013) The exist of action for solar panels has decreased signifi locoweedtly. The average cost for tier 1 solar photovoltaic manufacturers is expected to slide by 6% during 2014, keep the downward trend stick in place since 2008, bringing the overall cost to a record low of $0.20 per watt, concord to the latest research from NPD. (NPD Group, Inc., 2013) Further consumer incentives embroil lower utility bills, increased task credits and higher resale values. Homes with solar-power system victimization photovoltaic (PV) panels sell for an average of $24,705 to a greater extent than homes without PV systems, research finds. (Tan aka, 2014)The government supports the c erstwhilept of solar power and aims to make it a major animation source. Solar power as cheap as coal that is the consecrate grail of the solar power industry (R. Glenn Hubbard, 2012) presidential term support includes generous subsidies to the consumer and producers of the PV industry. Government agencies, utilities and others offer a variety of levy credits, rebates and other incentives to support energy efficiency, uphold the use of renewable energy sources, and support efforts to conserve energy and lessen pollution. (Energy, 2014) I see four main factors influencing the price expandibleity of demand Availability of last substitutes.Are there many easy close substitutes for solar panels? The demand impart tend to be elastic if Cindy and her customer can switch among the various 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 be experience the re argon other forms of electricity (coal/power plants). We once considered personal computers a luxury and they argon now a necessity. Perhaps PVs will be viewed the same focussing in the future. How much of my income will PVs consume?A large administer of consumers income equals elasticity. What portion of income can your customer devote to the cost of solar panels? If it is a large share (elastic), what tradeoffs will lymph gland need to consider to make it a worthwhile purchase? What is the time prospect when making decisions on PVs? PV systems have productive life cycles of 30-50 years. (Brownson, 2014) A bimestrial time horizon is said to be elastic.RecommendationsUpon review of various criteria such as elasticity of demand, cost of production, etc, I would sanction Cindy to pursue this business venture. This sector is set to grow exponentially in the future. The fall in solar PV prices as wellspring as other incentives will cause higher demand for installation. Th is will clear Cindys new business venture by bringing more installation business and lower input costs. This can be seen in the demand bring 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 chip of the clean energy subsidy pie.BibliographyBastach, M. (2013, bound 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 protect Street Journal http//online.wsj.com/news/articles/SB10001424052702304198504579571960667560156?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304198504579571960667560156.html