1) Explain why the average total cost is minimized when it is equal to the marginal cost.
2) With simple math conditions, explain why a profit-maximizing firm shuts down when the output price is below the average variable cost.
3) Give an example of production function which exhibits increasing returns to scale and diminishing marginal product of labor at the same time. In addition, prove that the function has these properties.
4) Explain the (at least) two major differences between production in the short run and production in the long run.
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