Question 1

Ah Ching is a durian farmer, and the world durian market is perfectly competitive. The market price is RM25 a kilo. Jenny sells 40 kilos a week, and her marginal cost is RM20 a kilo.

• Calculate Ah Ching's total revenue.
• Calculate Ah Ching's marginal revenue.
• Is Ah Ching maximizing profit? Explain your answer.
• The price falls to RM18 a kilo, and Ah Ching cuts her output to 25 kilo a week. Her average variable cost and marginal cost fall to RM18 a kilo. Is Ah Ching maximizing profit? Is she making an economic profit or incurring an economic loss?
• Based on the answers provided in C and D, what is ONE point on Ah Ching's supply curve that demonstrates quantity and price?