a) Despite being a small local sundry shop, I can always beat the price that Tesco charges for the same product. Tesco must pay rent on its store while I own my own shop and have no rent to pay. Discuss. (10 marks)

b) Evaluate and explain these two statements.

1. An increase in fixed cost increases the minimum-cost output.

2. An increase in fixed cost increases marginal cost. (10 marks)