Question: 1. On graph paper, using the cost diagram, illustrate the following: a. AVC, ATC, AFC, and MC. b. AVC, ATC, AFC, and MC when

1. On graph paper, using the cost diagram, illustrate the following: a.

1. On graph paper, using the cost diagram, illustrate the following: a. AVC, ATC, AFC, and MC. b. AVC, ATC, AFC, and MC when Fixed cost rises by 50%. c. AVC, ATC, AFC, and MC when Variable Cost rises by 50%. 2. On graph paper, using the isoquant diagram, illustrate the following: Cost-minimizing choice of K and L inputs for an output of q = 1,000 when the cost of capital and labour are identical. a. b. The new cost-minimizing choice of K and L inputs for an output of q = 1,000 in (a) when wages fall to half the cost of capital.

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