7. The table below shows the long-run average cost of producing knives:

Knives per hour 1,000 2,000 3,000 4,000 5,000 6,000 Cost per knife $2 $1.50 $1.00 $1.00 $1.20 $1.30

a. Draw the long-run average cost curve for knives.

b. Shade the regions corresponding to economies of scale, constant returns to scale, and diseconomies of scale.

c. In the region of the long-run average cost curve that corresponds to economies of scale, what is happening to the cost per knife?

d. In the region of the long-run average cost curve that corresponds to constant returns to scale, what is happening to the cost per knife?

e. In the region of the long-run average cost curve that corresponds to diseconomies of scale, what is happening to the cost per knife?