4. (20 points) Chocolate-R-Us produces chocolate Santas using the production function: Q2K 1M where K 1s the amount of capital and L 1s the amount of labor used in the process. Assume that the price of capital 1s r and the wage rate 1s w. a Suppose the capital 1s fixed at 10 units 1n the short-run. What 1s the firm's short- run cost function? Calculate marginal cost, average vanable cost, and average fixed cost. b Assume the wage rate 1s $8 and cost of capital 1s $2. What 1s the minimum costin the long run needed to produce 144 chocolate Santas given the above production function? Illustrate on an 1soquant/isocost graph the difference between your answers in part a and b. Explain intuitively why long run costs should always be lower thanshort run costs