1.Explain the concept of returns to scale.

2.What is the typical shape of the average fixed cost (AFC) curve? Why is it shaped this

way?

3.Graphically explain the interrelationship between average cost and marginal cost.

4.At 100 units of output, total cost is $30,000 and total variable cost is $14,000. What

does average fixed cost equal at 100 units?

5. List and describe three factors that are relevant to the determination of price elasticity

of demand.

6. Describe what cross elasticity of demand measures.

7. Comment on the truth or falsity of each of the following statements:

i. The rice growers can increase their revenues by raising price.

ii. The owner of a car shop can increase their revenues by raising price.