Part 1: Definitions For each pair of terms / concepts, define each term / concept and explain the relationship between them. The ideal answer is three - four sentences. One for each definition and one for the relationship. 1. Compensating variation and Equivalent variation. 2. Returns to scale and Long run average cost. 3. Marginal Cost and Marginal Product. 4. Marginal rate of technical substitution and Isoquant. 5. Cost function and Conditional factor demands