=+B. We will explore production processes with initially increasing and eventually decreasing returns to scale in exercises 12.5 and 12.6. Here, we instead focus on exploring the impact of recurring fixed costs (like annual license fees) on the shape of cost curves. Consider, as we did in exercises 12.2 and 12.3, the Cobb–Douglas production function x 5 f1,, k2 5 A, a k

b