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Mr. Adam wishes to purchase three units of 2.0 hp inverter air conditioners for his new home. He received quotations from four suppliers. Each supplier

Mr. Adam wishes to purchase three units of 2.0 hp inverter air conditioners for his new home. He received quotations from four suppliers. Each supplier is willing to supply and install the air conditioners if Mr. Adam pay a price that exceeds their quotation price (opportunity cost) as shown in the table. Table: List of air conditioner suppliers

Contractor

Quotation Price (RM)

BSB

900.00

TSB

800.00

ABSE

600.00

KE

500.00

(a) Explain the consequences if Mr. Adam choose the quotation price below RM 600.00 (5 MARKS)

(b) By using the data in table, plot a supply curve graph to measure the suppliers

(producer) surplus and with the aid of diagram discuss the result of the supply curve graph that you have plotted. (15 MARKS)

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