MANAGERIAL ECONOMICS (ECO 404) ASSIGNMENT

[Fahad Iqbal]

MANAGERIAL ECONOMICS (ECO404) ASSIGNMENT DUE DATE: MAY 23, 2018 MARKS: 15 Dawlance United Refrigeration Industries Ltd. was established in 1980. It is the largest company in Pakistan engaged in appliance business. Dawlance gives sales promotion to its customers in different ways in different months of the year. Sales promotions often come in the form of discounts. Discounts impact the way consumers think and behave when shopping. Sales promotions are a great way to build year-over-year and month-over-month revenue growth. Keeping in view this objective General Manager of Marketing of Dawlance Refrigeration Industries has decided to decrease the price of refrigerators from Rs.50, 000 to Rs.30, 000 by giving 40% discounts at the end of summer season. They have estimated that this policy will increase their sales of refrigerators from 3000 to 6000. From the above given information: a. Estimate the demand function for the Dawlance refrigerators. b. Either the total revenue (TR) of the Dawlance Refrigeration Industries has increased. Give your answer by calculations of TR. c. How should refrigerators prices be set to maximize total Refrigeration Industries revenue? How this revenue maximizing method is useful for the company? (Marks: 5+3+7)

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