The figure below illustrates a series of short-run cost curves numbered AC1 through AC4, which correspond to the only four different plant sizes possible. 
a) What can you say about returns to scale?
b) Are economies of scale present?
c) If it takes 6 workers and 30 units of capital to produce 10 units of output, how much labour and capital are necessary to produce 20 units of output?
Definitions:
Operating Expenses
Ongoing expenses related to the operation of a business, excluding the costs of goods sold.
Average Operating Assets
The average value of the assets used by a business in its operational activities over a period of time, used to measure efficiency and profitability.
Interest Expense
The cost incurred by an entity for borrowed funds, including loans, bonds, or lines of credit.
Tax Expense
The total amount of taxes a company incurs on its taxable income, including federal, state, and local taxes.
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