Business Economics Essay Example for Free

Business Economics EssayCindy wants to endue in a new business that involves the installation of solar panels. In order to make an informed stopping point on this business venture, she provide need to review potential profit/loss in the solar panel patience by considering future prospects for this type of business. Cindy also needs to decide whether she will invest her own funds or borrow the money to start the business.The imminent growth of the solar photovoltaic (PV) industry is almost certain. When observing the rising costs of ember and natural gas prices, the decrease of PV carcass costs, and the government support of solar technology, the PV market looks to have a significant increase in raft over the next few years. According to SolarBuzz, a website dedicated to Solar Power and Energy, The solar PV industry has reached a critical tipping point, with end-market contract hitting record levels almost every quarter. This growth is being control by leading module supp liers and project developers that returned to profitability during 2013, and which have now established highly-effective global gross revenue and marketing networks. (NPD Group, Inc., 2013)The article also states that demand 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 average cost for layer 1 solar photovoltaic manufacturers is expected to fall 6% during 2014, continuing the downward trend install in place since 2008, bringing the overall cost to a record low of $0.20 per watt, according to the in vogue(p) research from NPD. (NPD Group, Inc., 2013) Further consumer incentives include lower utility bills, increased tax credits and higher resale values. Homes with solar- position outline using photovoltaic (PV) panels sell for an average of $24,705 more than homes without PV systems, research finds. (Tanaka, 2014)The go vernment supports the concept of solar power and aims to make it a major life force 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 hold out a variety of tax credits, rebates and other incentives to support energy efficiency, encourage 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 snap bean of demand Availability 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 various types of PVs for the identical 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 (co al/power plants). We once considered face-to-face computers a luxury and they are now a necessity. Perhaps PVs will be viewed the equivalent 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 purchase? What is the time horizon when fashioning decisions on PVs? PV systems have productive life cycles of 30-50 years. (Brownson, 2014) A longer time horizon is utter to be elastic.RecommendationsUpon review of various criteria such as elasticity of demand, cost of production, etc, I would encourage Cindy to abide by this business venture. This sector 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 benefit Cindys new business venture by bringing mo re installation business and lower remark costs. This can be seen in the demand supply figureIt also makes good economic moxie for Cindy to borrow money for her solar panel business venture as the government provides various subsidies to businesses compound 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 putting 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/ customer/593 Energy, U. D. (2014, may 25). Tax Credits, Rebates, and Savings. Retrieved from Energy.gov http//energ y.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 highway Journal http//online.wsj.com/news/articles/SB10001424052702304198504579571960667560156?mg=reno64-wsjurl=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304198504579571960667560156.html