Average rate of change of a function, as opposed to instantaneous rate of change, can be calculated by using the good old-fashioned slope formula from, like, 7th grade: (y2 - y1) / (x2 - x1).
f(1) = 1/4 , so use (1 , 1/4) for (x1 , y1)
The question asks you to use x2 = 2 , then 1.1 , then 1.01 etc.