{Ii-4(a) {5 points) You an a small bakery, specializing in cookies. You produce cookies using capital [ K] and labour {N}, and the number of cookies you produce is goyerned by the following production function: ELK, N) = 203: \"EN \"2. You operate in competitiye labour and product markets. You can sell cookies at a price of $2 each. You must pay to = 10 for a unit of labour. and r = 40 for a unit of capital. [Note: giyen this production function, MRTS = % and MPH = 10K MINTm] You decide that your long-run profit maximizing number of cookies to produce is Q = 4, 000. How much labour and capital will you employ? Illustrate your answer with a carefully labelled graph. Q4(b) (5 points) [Builds on Q4(a)] There is a shortage of bakers AND capital in your hometown! This increases the market wage from 10 to w, and the cost of capital from 40 to 50. Immediately after these price changes, you change your short-run input of labour to N = 64. What is w'?Q4(c) (5 points) Consider the long-run implications of the price changes from part (b). In the long run, do expect to use more or less labour, relative to part (a)? Do you expect to u more or less capital, relative to part (a)? Explain, with reference to scale and substitution effects