[c] Consider the following model of long-run competition. Repair shops of the kind described above can freely,r enter and exit the market? each furnished with K = l; but there are no repair shops with higher or lower levels of K. 'What is the price p in the longrun equilibrium? How much does each repair shop produce? Find how ill-air},r repair shops will he operating in the longrun equilibrium if the market deulaild curve is: p + Y 2 105B. 2. Charlie has a repair shop that uses three inputs: Unskilled Labor (quantities of which will be denoted by L), Skilled Labor (H) and Machinery (K). The inputs (L, H, K) produce: y = LEHiKl units of repairs. Charlie is a price-taker in all markets. The wages of unskilled and skilled labor are wz and wy respectively, and the running cost of K units of machinery is wx. Charlie's repair shop is equipped with K = 1 unit of machinery, which cannot be adjusted. To produce any positive output all the machinery in the repair shop must be turned on, but if no output is produced he can choose not to turn on the machinery. There is no upper limit on the output of Charlie's repair shop. He is a profit maximizer, and hence for any level of output y he will adjust (L, H) to minimize cost. Input prices are (WL, WH, WK) = (1, 2, 27). (a) Derive Charlie's short-run cost function sc(wL, WH, WK, y, K), and then specialize it to the given input prices. Determine the cost-minimizing ratio: L( WL , WH , WK , y, K) H( WL , WH , WK , y, K) of unskilled to skilled labor. (b) Let the output price be p. What is Charlie's optimal output and profit as a function of p