question 2........

For example: K 0-510.5 can be written as K^0.5L^0.5. (A) Suppose the production function for T-shirts can be represented as q = L0.5 K0.5 Show that the marginal productivity of labor diminishes in the short run. What is the cost minimizing bundles of labor and capital in the long run for T-shirts where w = 10 and r = 10 when q=100 units? [4 points] (B) Give the formula for AFC, MC, AVC and AC if the cost function is C = 10 + q- .Do these cost functions follow the general rules concerning the relationships between MC, AVC and AC? [3 points] (C) Suppose the demand curve is Q =100 -10p and the supply curve is Q - 10p. The government imposes a price ceiling of p=3. Describe how the equilibrium changes. What effect does it have on consumer surplus, producer surplus and deadweight loss? Show your work. [3 points]