Consider a firm that is making a cost minimizing choice in the long run for a given quantity of output,Q1 Suppose this firm has a cobb douglas production functionQ KL (a)Suppose the price of capital (r) increases Using carefully labelled diagrams, illustrate what happens to the optimal choice ofKandLand the demand curve quantity demanded for labour for the optimal choice, just illustrate graphically (b)Now, suppose there was no price increase Instead, suppose that Big Boss decided to produce a lower quantityQ0 Draw a new version of the two graphs above to illustrate this case, showing the change in optimal choices ofKandLand the change in the demand curve quantity demanded (c)Plot the total cost function (TC1) for the firm on a graph with Total Cost on the vertical axis and quantity on the horizontal axis Now draw a second Total Cost function (TC2) to illustrate the case where the price of labour decreased (d)Suppose that you knowK 4Q r2andL 2Q w2 You also know thatw 3andr 1, but Big Boss has not yet told you how much to produce how to find the expressions forTC(Q),AC(Q)andMC(Q)

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Consider a firm that is making a cost-minimizing choice in the long-run for a given quantity of output,Q1. Suppose this firm has a cobb douglas

Consider a firm that is making a cost-minimizing choice in the long-run for a given quantity of output,Q1. Suppose this firm has a cobb douglas production functionQ=KL.

(a)Suppose the price of capital (r) increases. Using carefully labelled diagrams, illustrate what happens to the optimal choice ofKandLand the demand curve/quantity demanded for labour. for the optimal choice, just illustrate graphically.
(b)Now, suppose there was no price increase. Instead, suppose that Big Boss decided to produce a lower quantityQ0. Draw a new version of the two graphs above to illustrate this case, showing the change in optimal choices ofKandLand the change in the demand curve/quantity demanded.
(c)Plot the total cost function (TC1) for the firm on a graph with Total Cost on the vertical axis and quantity on the horizontal axis. Now draw a second Total Cost function (TC2) to illustrate the case where the price of labour decreased.
(d)Suppose that you knowK= 4Q/r2andL= 2Q/w2. You also know thatw= 3andr= 1, but Big Boss has not yet told you how much to produce. how to find the expressions forTC(Q),AC(Q)andMC(Q).