Question 3.1 to 3.2 is based on the diagram below relating to cost and production theory of a firm:

3.1 Label the curve. (2)

3.2 Explain the economic concept that applies to the curve at the following quantities of output: 3.2.1 10 000 units (5) 3.2.2 30 000 units (5)

3.3 Differentiate between accounting costs and economic costs. Use examples to motivate your answer. (8)

Cost per unit ($) LRAC 10,000 20,000 30,000 Units of output