AutoCad :: Setting Page Size And Grid Scale?

I set up a new page thus (I live in a country which uses metric units, so ...):

Drawing Units Setting18-07-2013 9-24-06 AM.jpg

Then:

Command: '_limits
Reset Model space limits:
Specify lower left corner or [ON/OFF] <0.0000,0.0000>: 0.00,0.00
Specify upper right corner <3.5000,2.7000>: 3.65,2.74
Command: C
CIRCLE
Specify center point for circle or [3P/2P/Ttr (tan tan radius)]: 1000,1000
Specify radius of circle or [Diameter]: 250
Command:

and I get:

Range Problem 18-07-2013 9-36-57 AM.jpg

The circle was centred at x=1000 metres, y=1000 metres, yet it displays right down at the bottom left of my screen. Compare the radius of the circle to the distance from the centre to the origin - it's nothing like 1:4! Look at the coordinates for the cursor!

Zooming in and zooming out has no effect on the huge dimensions indicated by the coordinates.

I know this must be simple because it is not mentioned in any textbook or tutorial I have been able to find. Authors don't seem to think it is important, but it's driving me nuts! The question is this:

How do I set the page size and grid scale to something sane?

I am pretty sure that this scale problem is at the root of many of the other problems I am having. A14 is doing it's job faithfully but the display is so small that I cannot see what is happening !