E-Systems, a high-tech IT company, has the following production function: Q(L, K) = (?L + ?K)^2, where L is the weekly labour hour, K is machinery used, and Q is the quantity of manufacturedcomputer chip. The marginal product of labour and marginal product of capital are:MP =??L+?K?L^-1/2?MPk=??L+?k?K^-1/2. The hourly wage, w, is 20, and the rental rate for themachinery, r, is 10.

Suppose the market for computer chips is perfectly competitive. Firms active in this market are identical with the cost function: TC = 200 + 2Q2. (f) If the market is at the equilibrium price=$80, how many chips each firm would produce? (g) What is the profit each firm makes? (h) Will any of the firms shut down and exit from the market? Explain. (i) What is likely to happen to this market in the long run? Show your answer in words and on graph