Keller Econ 545 Project
Solar Panel Services
Keller Graduate School of Management
Business Economics
(ECON-545)
March 21th, 2015
Introduction
My neighbor Cindy is asking my advice about her new idea of running a contracting business for the installation of solar panels. She is interested about the cost savings that households and business can take advantage of as a competitive advantage to promote the investment. In addition, she thinks that consumers will be willing to invest in solar panel services due to the reality that these days individuals are concerned about the environment and also they wish to reduce pollution somehow. However, Cindy is concerned about risking her life savings on a venture that might not succeed or become profitable enough.
In the following pages I'm going to address the effects that determinants of demand, such as income, prices of related goods, tastes, population and demographics, and expected future prices, have in the demand curve for solar panel services. At the same time, I will make the same analysis with the supply determinants, such as prices of inputs, technological change, prices of substitutes in production, number of firms in the market, and expected future prices, in order to give Cindy a better understanding about the importance of the supply and demand determinants in the process of broadcasting a future behavior of her business idea.
Finally, I will give her some recommendations to take into consideration at the moment she start running her interesting idea.
2
Demand Determinants
a. Individual demand determinant analysis
Income
Individuals are going to demand more solar panel services if income increases because they would have more power consumption. According to Hubbard & O'Brien (2013), "The income that consumers have available to spend affects their willingness and ability to buy a good". (p.73) For example, if a family income increases from $45,000 per year to $50,000 per year between 2015 to 2016, that increase is going to
Keller Graduate School of Management
Business Economics
(ECON-545)
March 21th, 2015
Introduction
My neighbor Cindy is asking my advice about her new idea of running a contracting business for the installation of solar panels. She is interested about the cost savings that households and business can take advantage of as a competitive advantage to promote the investment. In addition, she thinks that consumers will be willing to invest in solar panel services due to the reality that these days individuals are concerned about the environment and also they wish to reduce pollution somehow. However, Cindy is concerned about risking her life savings on a venture that might not succeed or become profitable enough.
In the following pages I'm going to address the effects that determinants of demand, such as income, prices of related goods, tastes, population and demographics, and expected future prices, have in the demand curve for solar panel services. At the same time, I will make the same analysis with the supply determinants, such as prices of inputs, technological change, prices of substitutes in production, number of firms in the market, and expected future prices, in order to give Cindy a better understanding about the importance of the supply and demand determinants in the process of broadcasting a future behavior of her business idea.
Finally, I will give her some recommendations to take into consideration at the moment she start running her interesting idea.
2
Demand Determinants
a. Individual demand determinant analysis
Income
Individuals are going to demand more solar panel services if income increases because they would have more power consumption. According to Hubbard & O'Brien (2013), "The income that consumers have available to spend affects their willingness and ability to buy a good". (p.73) For example, if a family income increases from $45,000 per year to $50,000 per year between 2015 to 2016, that increase is going to
References: Brown, N. (2013). Forecast: Cost Of PV Panels To Drop To $0.36/Watt By 2017. Clean Technica. Colby, S. & Ortman, J. (2015). Projections of the Size and Composition of the U.S. Population: 2014 to 2060 http://www.census.gov/content/dam/Census/library/publications/2015/demo/p25-1143.pdf Diamandis, Peter (2014) https://www.energysage.com/solar/cost-benefit/solar-incentives-and-rebates Honmann, Jasper (2014) Hubbard , R. G., & O 'Brien, A. P. (2013). HO4e_Ch13_1Click. Retrieved on 3/21/2015 from PowerPoint Slides-Hubbard Text Mehta, Shyam (2009). PV in 2009: Winners, Strugglers and Losers. GreenTechSolar. Retrieved on 3/20/2015 from http://www.greentechmedia.com/articles/read/pv-dont-get-left-behind-3637 Shahan, Z. (2014). Price Of Solar Much Lower Than Solar Savings. Clean Technica. Retrieved on 3/14/2015 from http://cleantechnica.com/2014/02/01/real-cost-solar/