Question: 2. For the production function in exercise 1, let the price of labor be w and the price of capital be r. a. The efficient

2. For the production function in exercise 1, let the price of labor be w and the price of capital be r.

a. The efficient usage function for labor is L* = _______.

b. The efficient usage function for capital is K* = ________ .

c. Find the long-run cost functions: LTC, LAC, and LMC.

d. Show that both LAC and LMC increase at any Q when either w or r increases.

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