Business Econ - Solar Panels Essay

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[Your Name] Business Economic Professor Andrew Appleson March 31, 2014 By [Your Name] Business Economic Professor Andrew Appleson March 31, 2014 By Solar Panels Solar Panels INTRODUCTION When thinking of starting a contracting business to provide installation services of solar panels to roof tops, you need to consider all the factors. Although, it appears to have a cost saving components and helps with the environment and reduce pollution, we will take a look at other factors as well. We need to determine the effects of the following factors: * Supply and Demand * Elasticity * Costs of Production * Pricing * Economic or Normal profits or loss This will help provide Cindy the best advice as she considers a startup solar panel installation company of her own. Showing her the beneficial factor that such an investment would provide. RELEVENT ECONOMIC PRINCIPLES When looking at the solar panel industry, I found that the demand for solar panel services are at a current increase. The social and political outtake from the ever-increasing energy cost of alternative energy sources and energy product has given the solar industry a boost with the green campaigns and government stimulus for solar companies (Eric B. Storey CPM, 2012). The price elasticity of demand for solar panels is determined by looking at four main factors that affect the price; i) substitute source, ii) determine whether solar panels are inelastic or elastic, iii) cost and investment in equipment, and iv) short run and long run of solar panels in the economy (Dutton, n.d.). Useful energy as a substitute is available, which would make the demand more elastic for solar energy sources, Energy is a necessary source and inelastic, however solar panels on your roof top as a source of energy is more of a luxury and considered elastic. The cost of energy changes

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