(a)[12]
Explain why a firm’s short-run average cost curve is normally shown as U-shaped, and explain how the short-run average cost curve is connected to the firm’s long-run average cost curve.
(b)[13]
It is argued that both perfectly competitive firms and monopolies try to maximise profits. Discuss whether this means that price, output and profit levels are likely to be the same in perfectly competitive firms and monopolies.