1. Assume that a firm has five identical machines, each operating independently. Assume that with all 5 machines operating normally, 100 units of output are produced each day. Below what level of output will AVC and MC rise?

2. Manufacturing firms like the one we have been describing will have other fixed costs (such as rent and managerial overheads). Does the existence of these affect the argument that the AVC curve will be flat bottomed?