1. Consider a firm's short-run production possibilities. Let q = LiK'g, r and w denote, respectively, the prices of K (capital) and L (labor). Suppose I? = 100 (xed) and L is variabie. a. b. c. Write down the expression for the short-run production function. l.Mhat is the xed cost (Ft), variable cost (VC), average cost (AC) and, marginal cost {MC}? Let q* denote the level of output where average costs are the lowest level possible and minimized. Show that MEN\") = AC(q*). And, when MC(q] Ath), average costs increase as q increase. Provide some intuition for this result. Using the case in parts a and b of this problem, caiculate q*(r,w, I? = 100). Illustrate this in a figure where q is on the horizontal axis and AC(q) and MClq} are on the vertical axis. Compute the marginal product of labor. In a sentence or two, provide some intuition for why MC = WIMPL