2) Evan wants to go into the donut business. For $500 per week. he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K = 1' r = 500]. He must pay unionized donut bakers a weekly salary of $400 each (w : 400). Assume that in order to produce a positive number of donuts (q > [l] he needs a positive number of workers (L > El) that is, zero workers can produce zero donuts. Evan projects that every additional worker will increase his weekly production of donuts by 5 pounds. a. If Evan wishes to make 25 pounds of donuts [q = 25]. how many bakers are required given the current level of capital? How much will it cost to produce this? Uhat is. what is the total cost?) b. What is the marginal product of labor? Is the marginal product of labor diminishing? Explain. c. Find the shortrun production function [where K = 1] that represents the relationship between output (q, where q is measured in pounds] and labor (1) in Evan's bakery. d. Derive Evan's short-run total cost function (as a function of q, where q is measured in pounds). e. Derive the marginal cost {MC}. the average total cost (ATC). and the average variable cost (AVG from your answer to 'd' above. f. Suppose that Evan's weekly rent has gone up [e.g.. from $500 to 3500]. Briey explain what will happen to the average total cost (ATE) and the average variable cost (AVC) as a result [|.e.. will AVC increase? Decrease? Remain unchanged? What about ATC?]