Answer Happy

(a) Ahmad Property & Development and Chong Property Investment, are the two firms in the Malaysian property and real estate market. Each firm has just come up with an idea for a new building item which it would sell for RM500 each. Assume that the marginal cost for each new building item is a constant RM300 and the only fixed cost is for advertising. The advertisement will cost each firm RM6 million. On the basis of its market research, Ahmad Property & Development and Chong Property Investment estimate that its initial 2 million customers will buy one unit of the product each month in the coming year, for a total of 32 million units. The details on the sale of the new building item of each of the three firms are shown in Table Q2(a). Table Q2(a): Price and number of customers for new building item Ahmad Property & Chong Property Investment Development Month Price (RM) Demand Price (RM) Demand (mil) (mil) January 500 2 500 2 February 500 2 500 3 March 500 4 500 4 April 500 6 500 5 May 500 8 500 6 June 500 10 500 7 July 500 12 500 8 August 500 14 500 9 September 500 14 500 10 October 500 14 500 11 November 500 14 500 12 December 500 14 500 13 Based on the information shown in Table Q2(a), compute: (i) The total cost of production and total sales for the new building item that Ahmad Property & Development and Chong Property Investment would incur. (4 marks)