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6. The production engineers at Impact Industries have derived the expansion path shown in the following gure. The price of labor is $30 per unit.

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6. The production engineers at Impact Industries have derived the expansion path shown in the following gure. The price of labor is $30 per unit. 600 400 Expansion path '* (short run) 300 Capital (K) Expansion path (long run) . \\ 150 500 600 900 Labor (L) 200 a. What price does Impact Industries pay for capital? b. If the manager at Impact decides to produce 1,200 units of output, how much labor and capital should be used to minimize total cost? Explain. c. What is the average total cost of producing 1,200 and 1,400 units of output in the long run? d. Impact Industries originally built the plant (i.e., purchased the amount of capital) designed to produce 1,200 units optimally. In the short run with capitaf xed, if the manager decides to expand production to 1,400 units, what is the amount of labor and capital that will be used? (Hint: How must the rm expand output in the short run when capital is xed?) e. Given your answer to part at, calculate average variable cost, average xed cost, and average total cost in the short run of producing 1,400 units of output. f. The manager plans to continue producing 1,400 units in the long run. How would you advice the manager

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