(b) Let us assume that labor supply is exogenously xed at LS = 16 and focus on the capital demand equation. Plot the capital demand function when LS = 16 (Show at least three points of the curve). (c) Suppose the supply of capital is inelastic and given by K3 = 64. Plot the capital supply line on the same graph as the capital demand curve. Find the real rental price of capital that clears the market and show it on the graph. 2. Suppose a rm uses both labor L and capital K as inputs to production. Its production function is of the Cobb-Douglas form, i.e. F(K, L) = Kiri The rm charges a price P for every good it sells, pays a nominal rental rate R to every unit of capital it hires and pays a nominal wage W to every unit of labor it hires