3. Assume a firm faces these costs: total cost of capital $4,000; price paid for labor = $20 per labor unit; and price paid for raw materials = $8 per raw-material unit.

a. If the firm can produce 2000 units of output by combining its fixed capital with 200 units of labor and 500 units of raw materials, then what are the total cost and average total cost of producing the 2,000 units of output?

b.The firm now improves its production process so that it can produce 3,000 units of output by combining its fixed capital with 100 units of labor and 500 units of raw materials. What are the total cost and average total cost of producing the 3,000 units of output?

c.Based on the data, what conclusion can you draw about the effect of process innovation on economic efficiency?