Econ 545 Business Economics Case Study

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ECON 545: Business Economics Name Institution Date Situation B The focus of this paper will be on situation B. in this case, Cindy wants to invest in renewable energy industry. She is searching for a sector in the industry to invest in. this sector is that of contracting solar panel installation. According to her, businesses and families can save a lot if they go for solar panels. In addition there are government support regulations that ensure that the solar panels are made more accessible to people. The following is therefore a microeconomic analysis of this situation. Microeconomic Principles The solar panel market will be monopolistically competitive. This market is in such a way that each firm comes up with independent decisions…show more content…
Some of these factors include the Factors on the supply-side that affect prices include natural gas production, net imports, and underground storage levels. Increases in supply tend to pull prices down, while decreases in supply tend to push prices up. Increases in prices tend to encourage production, imports and sales from storage inventories. Declining prices tend to have the opposite effects. Factors on the demand side include economic conditions, winter and summer weather, and petroleum prices. (Petroleum fuels may be an economical substitute for natural gas for manufacturers, power generators, and large building owners.) Higher demand tends to lead to higher prices, while lower demand can lead to lower prices. Increases and decreases in prices tend to reduce or increase…show more content…
Some reports have claimed that trade disputes could affect the production of solar panel and give China more comparative advantage in production over the United States. The United States in 2010 imported solar panels worth over 278.3 billion dollars from China. 98% of the solar product supplies that the United States used came from China.on the other hand, the exports of solar products from the United States to China has only amounted to 2 billion dollars. This situation is important for a number of reasons. First, China is looking for a way of raising the amount of their own utilization of solar power while at the same time bringing down the number of solar panels it is exporting. With these new policies in China seeking to increase the use of solar power in force, the amount of supply that the China exports to the United States is going to come down significantly. When the supply reduce, the price of the solar power in the United States is going to rise five times by 2020. This reduction in the supply of solar panels is also going to bring down the number of organizations that are charged with selling and installing solar

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