d) How would the firm's demand for capital and labour change if the wage increased?

a) Give four possible sources for economies of scale. Some discussions are needed. b) Use the following table to explain the difference between the law of diminishing marginal returns and economies of scale. Arm uses the inputs capital (K) and labour (L) to produce output. The marginal retum of capital is denoted by , the marginal return of labour is . The cost of capital is the interest rate, . and the cost of labour is the wage, . In the long run, the firm can adjust both input factors. it) Explain why the combination of inputs that yields a given amount of output with minimum costs occurs when: (Hint: Explain what would happen if the equality did not hold)