2. Suppose that a firm's production function is q = 10K2Lz. The cost of a unit of capital is $80 and the cost of a unit of labor is $20. a. The firm is currently producing 100 units of output and has determined that the cost- minizing using an input mix of labor and capital with quantities 25 and 4, respectively. Illustrate this graphically using isoquants and isocost lines. Perry's Ice Cream is part of a compedtive ice cream industry sind has a total coot function Soweolga ly and & marginal cost function MC 5 4 4 4g. At the given market price of 320/palate of ice cream, the firm is producing 5 palates b. The firm now wants to increase output to 150 units. If capital is fixed in the short run, how much labor will the firm require? Illustrate this graphically and find the firm's new total short-run cost. [Hint: Plug in fixed capital input level and output into production function, then solve for L] he pretty Much how many palates should Perry's pros Much profitdoes Perry's make at the profit maximizing output sexpecting that the price forice cream will approve amuch no c. If you are given information about marginal product of capital and labor as follow: MPK = 5K-2LZ and MPL = 5K2L-2. Solve for the cost-minimizing input mix when the firm want to produce 150 units. Calculate the total cost of using this input mix. How does this cost compare with the cost in part b? What does this imply about long-run versus short-run cost? N