Here is an example of a firm with a shut-down decision. [That means, in plain language, that the 'tangency' answer may lead to negative profits and is only a local maximum, while the correct answer and global maximum is the corner solution with zero output and zero input. It all depends on prices, 'obviously'.] Suppose there is an output y produced from an input l. Let output price be p and input price be w. Technology is given by the function (0 if l 1 y=f(l)= l1 ifl1 It might really help to draw the diagram for this (labour on the horizontal, output on the vertical). What does the production function look like, roughly? (It is the constraint for the firm). In that diagram, what do iso-profit lines look like? (Those are the firm's 'indifference curves'.] Derive the firm's labour demand, supply, and profit function. Draw representations of the labour demand and the supply function. [To be precise: labour demand is drawn with respect to w for some p, while supply is with respect to p for some w.] Page 46 in the notes introduces the cost minimization problem. Let us work through that in this