Question: Question 5. Suppose Kean has the following production function and total cost function q=f(K, L)=K 0.5 L 0.5 TC(q) = 100K+10L a) If the price

Question 5. Suppose Kean has the following production function and total cost function q=f(K, L)=K^0.5L^0.5

TC(q) = 100K+10L

a) If the price of the output equals $10 and in the short-run K is fixed at K=1, how many units of labor should Kean use to maximize his profit? What is his short-run profit when profit is maximized?

b) Based on Kean's profit in a), should Kean produce in the short-run or shut down? Determine his short-run supply decision. (Hint: fixed cost is how much he pays to capital K)

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