IDO Ltd is an electronics manufacturer and retailer. Its main products are Netbook computers, PCs and Electronic Calculators. The current price of the Netbook is Rs.50,000, the PC is Rs.65000 and the calculator is Rs.4000. 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: (-) 0.6You have been asked to evaluate the planned price increases
a) Comment on the planned price changes.
b) Would a 10% price reduction have been better for some or all of the products?
c) What benefit (if any) would advertising bring to the firm?