Continue from b) c) Suppose we are in the short-run. For a fixed K such that K = Kbar. Find the optimal value of L*. (8 points)d) Let w be the price of each unit of labor and r be the price of each unit of capital.Calculate the short-run cost function. C^SR(q). e) Identify the variable cost and fixed cost in the short-run cost function, C^SR(q)that you calculated in d). f) Calculate the average cost and marginal cost of the short-run cost function,C^SR(q) that you calculated in d).

Question 6 (20 points) Consider the following production function. f ( L , K) = La . K 1-a a) State the formula and find the MRTS (L, K). (1 point each) b) State the 2 optimality conditions in the cost minimization problem. (1 points each) 9