Advanced Microeconomic analysis

Question 1 (20 marks) Suppose a small firm operating in Suva has the following production function f ( L, K) - VI VK - 1 The firm faces wage rate of w and rental cost of capital /. Based on the information provided: a) Determine the short-run total cost function, short-run marginal cost function and average cost function if capital is fixed at 10 b) Determine the demand for labour in the long-run. c) Determine the demand for capital in the long-run. d) Derive the long-run total cost function, long-run marginal cost function and long-run average cost function