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Question 2 [20 marks] (a) Explain why the marginal cost curve above the average variables cost...

Question 2 [20 marks]

(a) Explain why the marginal cost curve above the average variables cost curve is referred to as the firm’s short run supply curve? ( use both verbal and diagram analysis) (6)

(b) With a help of a diagram explain the following concepts: economies of scale, constant return to scale and diseconomies of scale. (6)

(c) Use the indifference curve approach to derive the Marshallian demand curve. (8)

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Answer #1

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