Econ 545 Project 1
Ottmas Richards
Econ545 – Project 1
1/25/18
Introduction: My neighbor Cindy wants to start a contracting business for installing solar panels (PV Modules). With the ever-growing popularity of ‘green efforts’ among households and businesses she has asked me for my advice before venturing into this industry. Cindy has heard of government incentives for installing solar panels. Cindy is motivated by the green efforts and wants to help reduce the pollution by utilizing a more environmentally friendly means of power. However, Cindy has some reservations before venturing into this industry; will it be profitable enough to risk her life savings? This paper will offer my research and advice in regards to the solar panel industry. I will cover such topics as supply and demand, elasticity, costs of production, pricing, and economic or normal profit or loss so she can make an informed decision about this business.
Relevant Economic Principles:
Before starting this business one thing to consider is supply and demand. In this case, demand is referred to how many solar panels (quantity) are desired by buyers. The quantity demanded is the amount of solar panels people are willing to buy at a certain price. Over the years, the biggest affect on the demand of solar panels has been the price, however, since early 2010 the average price for solar panels have dropped 64% in the United States (Wang, 2014).
Supply is defined as how many solar panels (PV modules) the market can offer. In other words, the quantity supplied is the amount of solar panels producers are willing to supply when receiving a certain price. Last year the global PV solar energy industry produced enough solar panels to supply the entire electricity demand in California; to put this in perspective, California is one of the world’s largest consumers of energy (Umeme, 2014).
California and other western states such as Arizona, New Mexico, and Nevada seem to be most optimal regions for the
Econ545 – Project 1
1/25/18
Introduction: My neighbor Cindy wants to start a contracting business for installing solar panels (PV Modules). With the ever-growing popularity of ‘green efforts’ among households and businesses she has asked me for my advice before venturing into this industry. Cindy has heard of government incentives for installing solar panels. Cindy is motivated by the green efforts and wants to help reduce the pollution by utilizing a more environmentally friendly means of power. However, Cindy has some reservations before venturing into this industry; will it be profitable enough to risk her life savings? This paper will offer my research and advice in regards to the solar panel industry. I will cover such topics as supply and demand, elasticity, costs of production, pricing, and economic or normal profit or loss so she can make an informed decision about this business.
Relevant Economic Principles:
Before starting this business one thing to consider is supply and demand. In this case, demand is referred to how many solar panels (quantity) are desired by buyers. The quantity demanded is the amount of solar panels people are willing to buy at a certain price. Over the years, the biggest affect on the demand of solar panels has been the price, however, since early 2010 the average price for solar panels have dropped 64% in the United States (Wang, 2014).
Supply is defined as how many solar panels (PV modules) the market can offer. In other words, the quantity supplied is the amount of solar panels producers are willing to supply when receiving a certain price. Last year the global PV solar energy industry produced enough solar panels to supply the entire electricity demand in California; to put this in perspective, California is one of the world’s largest consumers of energy (Umeme, 2014).
California and other western states such as Arizona, New Mexico, and Nevada seem to be most optimal regions for the
References: Bastasch, M. (2013, March 13). CBO: Most energy tax subsidies go toward green energy, energy efficiency. Retrieved January 24, 2015. Hill, J. (2013, November 22). Solar PV Production Costs To Drop In 2014. Retrieved January 23, 2015. Lorenz, Pinner, Seitz. (2008, July 9). Economics of Solar Power. Retrieved January 21, 2015. Tanaka, S. (2014, May 22). Payback Time for Solar-Power Energy Systems. Retrieved January 23, 2015. The Future of Solar. (n.d.). Retrieved January 23, 2015. Umeme, D. (2014, November 29). The Future of Solar. Retrieved January 21, 2015. Wang, U. (2014, June 24). A Guide To Boosting Solar Energy Demand. Retrieved January 21, 2015, from A Guide To Boosting Solar Energy Demand