1 (5 points) (a) Suppose the production function is Q = min (K, 2L) . How much output is produced when 4 units of labor and 9 units of capital are employed? Please explain. (b) You are an efficiency expert hired by a manufacturing firm that uses K and L as inputs. The firm produces and sells a given output. If w = $40, r = $100, MP1 = 20, and MPk = 40 Is the firm minimizing costs? If not, should the firm use more labor and less capital, or less labor and more capital (c) Given the following table, how many workers should be hired to maximize profits? Labor Marginal VMPL Wage Product Labor 1 8 $32 $100 2 32 $128 $100 16 $64 $100 Aw -1 $-4 $100 5 -12 $-48 $100 2. (5 points) Capital A D Oo C Labor B AB is the original (starting) isocost line. AC is the new (changed) isocost line. Qo is the isoquant. D is the original tangency point (cost minimization point for output Qo). (a) Is price of capital rising or falling or unchanged when the isocost line moves from AB to AC? Please explain. (b) Please draw an isoquant and show the new tangency point between the new isocost line AC and an isoquant that would indicate the new equilibrium point for this firm. (c) As a result of the price change, does output fall or rise? Please explain. 3. (5 points) Capital C F A E G Qo Labor B D What can you say about the cost of producing output level Qo represented by the isoquant given above at point E, compared to the cost of producing Qo output level at either point F or point G? Please explain. 4. (5 points) Currently wages show signs of increasing in the United States as the economy continues to recover from the pandemic. Companies are having trouble hiring workers and often higher wages are also not enough to convince workers to accept jobs at many companies. Explain how the shortage is due to a change in demand for workers and a change in supply of workers during the recovery from the pandemic. You must explain why demand for workers is low or high and why supply of workers is low or high