Consider a firm whose production function is

q = (KL)1/4

Q1a. (5 marks)

Find the short-run cost function

CShort(q;w, r, K )

Q1b. (5 marks)

Find the long-run cost function

CLong(q;w, r)

Q1c. (5 marks)

By subtracting between your derived short-run cost and long-run cost, show that

the long-run cost is always lower than the short-run cost for any given level of q,

regardless of the level of K and r.