4 A price-taking firm with production function F (K, L) = sqrt(KL) sets K = 1 and

cannot change it in short run.

Let w be the wage rate. The cost curve is given by: C= wL

Will the firm shut down in the short run if price p in the market is such that:

4.1 p > 400

A. Not enough information to determine

B. The firm will not shut down

C. The firm will shut down

4.2 p > 40

A. Not enough information to determine

B. The firm will not shut down

C. The firm will shut down

4.3 p > 1

A. Not enough information to determine

B. The firm will not shut down

C. The firm will shut down