A business owns two factories with the following output fuinction:- 9i = K Li (i = 1,2) Capital rental price and wage satisfies: r =w=le Two factories have different capital: K4 = 25, K2 = 100+ 1) If the business would like to minimize short run production cost, how should production be allocated between the two factories? In other worlds, solve 91 = xqz . You MUST state reasoning. (eg. If you think the solution exist when marginal cost of two factories equal, explain why). 2) Under the optimal condition in 1) between two factories, derive short run marginal cost total cost and average cost. Calculate MC100, MC125, MC200 3) How should the business allocate production in long run? Derive long run total cost, marginal cost, and average cost. 4) If the two factories displays decreasing returns to scale, explain why the firm should set the marginal cost of the last unit produced in both factories equal." A business owns two factories with the following output fuinction:- 9i = K Li (i = 1,2) Capital rental price and wage satisfies: r =w=le Two factories have different capital: K4 = 25, K2 = 100+ 1) If the business would like to minimize short run production cost, how should production be allocated between the two factories? In other worlds, solve 91 = xqz . You MUST state reasoning. (eg. If you think the solution exist when marginal cost of two factories equal, explain why). 2) Under the optimal condition in 1) between two factories, derive short run marginal cost total cost and average cost. Calculate MC100, MC125, MC200 3) How should the business allocate production in long run? Derive long run total cost, marginal cost, and average cost. 4) If the two factories displays decreasing returns to scale, explain why the firm should set the marginal cost of the last unit produced in both factories equal