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3. Suppose the production function of a firm is F(K, L) = KL. Moreover, if the firm is in the short run, then K =
3. Suppose the production function of a firm is F(K, L) = KL. Moreover, if the firm is in the short run, then K = 10 (K is fixed at 10 units). The firm wants to produce 200 units of output. a. Suppose w= 10 and r = 5. How much money would the firm save 1f it were operating in the long run mnstead of the short run? That 1s, it could choose both K and L and not just L. Explain your answer numerically and graphically. b. Suppose w and r are no longer known, but the production function is the same and the firm still wants to produce 200 units. What is one possibility for w and r for the firm to be indifferent to operating in the short run (when K 1s fixed at 10) and the long run, when both inputs are variable (can be changed)
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