1. A rm is using 400 units of capital and 200 units of labor to produce 20,000 units of output. Capital costs $80 per unit and labor $20 per unit. The last unit of capital added 100 units of output, while the last unit of labor added 30 units of output. Is the rm using optimal (cost minimizing) quantities of inputs? If not, what should the rm do in order to be productively efcient? 2. The production function is given by F (L) = 6L\". Assuming that each unit of labor services costs $12 and the price of output is $6, how many units of labor will the rm hire? 3. Suppose a rm has a market power in the labor market, but sells its output in a perfectly competitive market. Also suppose that its capital stock is xed in the short run, and the law of diminishing marginal returns applies. Can you draw the rm's demand for labor curve? If yes, draw it. If no, explain why you cannot do it