(a) Suppose we have the following production function: Q = 10 K + 5L_. Confirm the technology is constant returns to scale (CRS). Show your work and explain what it means.

(b) Suppose K and L are both variable. Let r = $20 and w = $20. What is the firm's cost minimization problem? Show and explain using the isocost and isoquants in a figure. Be sure to show their slopes.

(c) Now derive the long-run cost function for r = $20 and w = $20. You can use math or a table.

(d) Confirm that average and marginal costs are constant. Explain why this is the case.

(e) Now suppose r rises above $20. At what value of r will the firm switch from K into L? Explain and use the isocost/isoquant to explain.

(f) Show that long-run average costs rise as r rises (but stop rising if r is "very high"). Explain your reasoning.

(g) What do we mean by an exit price? What is the exit price if r = $15. What is the exit price if r = $60? Explain.