Question 1. Use any figures for prices and quantities to calculate and analyze the arc elasticity of demand relative to price for a product, and extend the analysis to showi ts implications on a product decision.
Question 2. Using fully explained indifference curve analysis, derive a demand curve for a product. As part of your answer, explain verbally and show mathematically that consumer equilibrium in the ordinal and cardinal approaches to consumer equilibrium are equivalent.
Question 3. If a firm enjoys economies of scale up to a certain output level, and cost then increases proportionately with ouput, what can you say about the shape of long-run average cost curves. Illustrate graphically the shape of this LRAC curve, and explain what kind of firm is likely to have this type of LRAC (a small firm with more labor and less capital or a large firm with more capital and less labor).