Calculate the average costs at points C , F , and G in Figure 6.2. Do they imply increasing or decreasing returns to scale? Why?

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H K Capital 50 849 A 40 25 G Expansion path Q=200 Q=150 Q=100 0 20 30 45 B E Labor Total costs (in $ thousands) $105 $78 $50 TC TC 1 T 0 50 100 150 200 250 300 Quantity A. Production Isoquants B. Derived Total Cost Function Figure 6.2 Production Function for a Hypothetical Physician Practice n