RCO Manufacturing is an Electronics manufacturer and retailer. Its main products are ultrabook computers, PCs and tablets. The current price of the ultrabook is 500 EUR, the PC is 800 EUR and the tablet is 40 EUR. In 2018, the firm sold 10 000 ultrabooks, 20 000 PCs and 100 000 tablets.

In an attempt to increase the total revenues 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:

Ultrabook: -1,5

PC: -2,5

Tablet: -0,6

You have been asked to evaluate the planned price increases.

1. Comment on the planned price changes and its impact on quantity demanded.

2. Count the change in total revenues

3. Recommend to the firm optimal strategy for all products.