1- Both short-run and long-run average cost curves are likely to have a negative slope up to a given level of output/scale. What are the reasons behind such negative relationship between average costs and output in the short and the long-run?

2- It is easy to conclude that when hiring workers in the short run whose marginal productivity rises, the average product of labor will rise as well. However, if workers productivity declines, average product of labor may still be rising. Explain why this may happen.

3-Briefly explain the difference between economies of scale, economies of scope and

returns to scale.

4- In the long-run with strictly convex isoquants. If the relative price of labor () exceeds the marginal rate of technical substitution ( MPL/MPK ). What changes should happen to the input mix? Explain your answer.