Question: Consider a rm that uses both capital {K} and labour {L} to produce a final product {0] that it sells at the market price 55.

Consider a rm that uses both capital {K} and labour {L}

Consider a rm that uses both capital {K} and labour {L} to produce a final product {0] that it sells at the market price 55. The firm buys Labour at a cost of $4 per unit and capital at a cost of 510 per unit. The rm is a price-taker for all prices with the following production function: Q = 4K 1321,11\"; This production function implies the following: If: MFR: ll\": MFL 2 if? it\": Suppose also that the firm currently has 15 units of capital W = 16} in the Short-Run. jroblern 2: Long-Run Cost h-Iinnnization Use the same production function: MPK: MIPL, and prices from Problem 1 (Q l 6: above image] for the followhig Q? Q9. Suppose also that we are now in the LongRun, and that the firm has decided to still produce the same Q* as in Problem 1. That is: le rm decides to set Q = 160. F. [f the rm wants to cgstminitpge, what must he the ratio of K to L that they employ given the prices in this rnarl'tet'.j 3. Suppose that the rm wants to produce Q\" = 160'. What is its cost-minimizing choice ofK S: L'?' 9. What are the firm's prots with this choice ofK S: L'? Is this greater than or less than your answer to (15'? Why is this the case

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