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4) Given the production function: Q=4K' LZ The price of the good being produced is $4/unit. The wage rate is w=$2/unit of labour. If capital

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4) Given the production function: Q=4K' LZ The price of the good being produced is $4/unit. The wage rate is w=$2/unit of labour. If capital is fixed at K=16 What is the optimal amount of labour the profit maximizing firm should hire? (5 marks) 5) Given that the competitive market price is equal to P , Should the firm shut down in the short run? Should it shut down in the long run? Explain. (5 marks) P MC ATC P* P=MR=AR=d AVC

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