Techs Ltd is an electronics manufacturer and retailer. Its main products are Netbook computers, PCs and Electronic Calculators. The current price of the Netbook is Kshs.50,000 the PC is Kshs.80,000 and the calculator is Kshs.4,000. This year the firm sold 10,000 Netbooks, 20,000 PCs and 1 million calculators. In an attempt to improve revenue the managers of the firm have decided to increase all prices by 10%. Market research has suggested that the price elasticity of demand for each product is: Netbook: -1.5; PC: -2.5; Calculator: -0.6.You have been asked to evaluate and comment on the planned price increases. a.What will be the resultant change in quantities sold after the price increase? b.Is a price increase advisable for all the three products? (Explain your answer).

Techs Ltd is an electronics manufacturer and retailer. Its main products are Netbook computers, PCs and Electronic Calculators. The current price of the Netbook is Kshs.50,000 the PC is Kshs.80,000 and the calculator is Kshs.4,000. This year the firm sold 10,000 Netbooks, 20,000 PCs and 1 million calculators. In an attempt to improve revenue the managers of the firm have decided to increase all prices by 10%. Market research has suggested that the price elasticity of demand for each product is: Netbook: -1.5; PC: -2.5; Calculator: -0.6.You have been asked to evaluate and comment on the planned price increases. a.What will be the resultant change in quantities sold after the price increase? b.Is a price increase advisable for all the three products? (Explain your answer).

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 3E

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