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a. Suppose a firm is maximizing profits in the short run with variable factor x 1 and fixed factor x2. If the price of x2

a. Suppose a firm is maximizing profits in the short run with variable factor x 1 and fixed factor x2. If the price of x2 goes up, what happens to the firm's use of x1? What happens to the firm's level of profits? 5 Marks b. A profit maximizing competitive firm that is making positive profits in long run equilibrium (may/may not) have a technology with constant returns to scale, Explain 5 Marks

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