Econ Paper

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ECON 545: Business Economics Name Institution Date Situation B The focus of this paper will b 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. Many factors affect the cost of installing the solar panels and the demand for the same installed solar panels. Therefore, it is important that Cindy have an idea of some of these factors especially in relation to the target market so that she can be aware of the economic viability of her project. The following is therefore a microeconomic analysis of this situation. Microeconomic Issues Some of the microeconomic issues that will be relevant to Cindy in this case are the demand and supply determinants. Cindy has to know the different factors affecting the demand and supply of the solar panels in the United States so that she can analyze and see the economic viability of the project. This is because these factors will help her understand how she can use these factors to determine how she can maximize the profit considering the situation in the targeted market. When the supply of the good is more responsive or sensitive to the changes in the price, it is said to have high price elasticity of supply. In this case, Cindy has to ensure that the supply of solar panels is very high so that the returns can be high. If the supply is low, the returns will be low and it will be difficult to maximize the profit(Smock, Rogers & Rudzki, 2007). Demand Determinants Some of the factors will affect the price elasticity of demand of the solar power panels. First is the presence of substituted. Solar power energy constitutes one of the many sources of energy in the United States. There are many other non-renewable sources like the natural gas and electricity generated from water.

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