3. (5 points) The average variable cost curve must always be U-shaped. False. The average variable cost curve may initially slope down but need not. However, it will eventually rise, as long as there are fixed factors that constrain production. 4. (5 points) If the demand curve is a linear function of price, then the price elasticity of demand is the same at all prices. False. It varies between different pairs of points along a linear demand curve.
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