Suppose a firm is producing a product using two inputs, labor and capital. The firm is facing the following cost structure:

• The cost of labor is $50 per unit and the cost of capital is $100 per unit.
• The firm's production function is Q = 10L + 20K, where Q is the output, L is the number of units of labor used, and K is the number of units of capital used.

1. What is the firm's marginal cost of production when it is using one unit of labor and no units of capital?

2. What is the firm's marginal cost of production when it is using one unit of capital and no units of labor?

3. Suppose the firm is currently producing 100 units of output. How many units of labor and capital is the firm using?

4. Suppose the price of the firm's product is $200. At this price, will the firm choose to increase or decrease its production? Explain.

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