(i)Explain why, typically, the long run Average Cost curve is U-shaped.

[5 marks]

(ii) What is meant by Fixed and variable cost and gives two examples of

each that are likely to incur in an agri-business of potato production.

[8 marks]

(iii) The Agri-Business provides further information on its cost and revenue

structures. It says that its marginal cost is determined using the following

formula: MC = 10Q+25. Similarly, its marginal revenue curve can be

determined by the following formula: MR = 75 + 5Q.

Based on the above information, find the profit-maximizing output.(6 marks)