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QUESTION 3 [25 MARKS] . Netix is the world's leading streaming entertainment service with over 209 million subscribers in over 190 countries (July 2021). Netix
QUESTION 3 [25 MARKS] . Netix is the world's leading streaming entertainment service with over 209 million subscribers in over 190 countries (July 2021). Netix started in 1997 as a DVD mail rental business. In 2007, the company shifted its business mode! and decided to go digital With the introduction of streaming media. Customers can now access a wide range of movies, TV series. and ' original Netix content for an affordable. nooommitment monthly fee. Netflix is considering launching a new, innovative product onto the Namibian market and is trying to decide on the right launch price for the product. The product's expected life is three years. Given the high level of costs which have been incurred in developing the product. Netix wants to ensure that it sets its price at the right level and has therefore consulted a market research company to help it do this. The research. which relates to similar but not identical products launched by other companies. has revealed that at a price of N360. annual demand would be expected to be 250 000 units. However. for every N52 increase in selling price. demand would be expected to fall by 2 000 units and for every N52 decrease in selling price, demand would be expected to increase by 2 000 units. A forecast of the annual production costs which would be incurred by Netix in relation to the new product are as follows: Annual reduction units 200 000 250 000 300 000 350 000 N3 N5 N$ N3 Direct material 2 400 000 3 000 000 3 500 000 4 200 000 Direct labour 1 200 000 1 500 000 1 800 000 2 100 000 1 400 000 1 550 000 1 700 000 1 850 000 REQUIRED n Determine the equation for the demand function (that is, the price as a Overheads function of quantity demanded. if P = a bit. then MR = a - be) Determine the Marginal Cost (MC) Calculate the optimum price Compute the maximum profit m Explain what is meant by price elasticity of demand QUESTION 4 [25 MARKS] The Portable Garage Co (P60) is a company specialising in the manufacture and sale of a range of products for motorists It is split into two divisions: the batten: divieinri minis... m
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