How many Ac's are sold in Delhi in a year?

Preliminary Questions:
1. Do we need to consider Commercial AC or Domestic AC’s ?- Domestic Only

2. There are a different types of AC’s in terms of wattage as well as split and
window ,can we assume that all ac’s sold are of same wattage - yes consider it to be
split 2 Ton AC

We can solve this problem using supply and demand side but here the constraint is the
income of people and hence we will go with demand side Approach

No. of AC’s sold = Replacement AC’s + New AC’s

Replacement AC’s = (No. of families who can buy* No. of AC’s)/Replacement Rate of
AC’s
New AC’s = Growth of India’s economy* No. of families
No. of AC’s sold = Replacement AC’s + New AC’s
(No. of families who can buy* No. of New AC’s = Growth of India’s
AC’s)/Replacement Rate of AC’s economy* No. of families

Population of Delhi 2 Crore

There are 10
lakh middle
class families
Rich = 20% Middle = 40% Poor = 40% and their
Income Distribution = 0.2* 2 Cr = 0.4* 2 Cr = 0.4* 2 Cr income will
= 40 Lakh = 80 Lakh = 80 Lakh grow every
year and new
No. of families AC’s will be
40/4 = 10 L 80/4 = 20 L 80/4 = 20 L
(Avg family size is 4) bought.
families families families
= 8% * 10
No. of AC’s 10 L*2 = 20L 20*0.5*1= 10L Lakh = 80K
New Ac’s
Replaced Ac’s (20L + 10 L)/15 = 2 L Replaced AC’s