DPS Indirapuram is predicting an atleast 15% reduction in its revenues in the Fall 2020 semester due to a reduced demand for school education caused by the current pandemic. Assume a decreasing returns to scale technology and a competitive market. Also, assume that the market was in the long run equilibrium prior to the outbreak of covid-19.

Discuss the short run and long run implications of this reduction for:

1) the choice of output by the school

2) capital and labour choices by the university