l) (10 points total) Semi-Con, a semi-conductor production rm, is trying to nd the cheapest way to produce their product. Their production function is Q (L, K) = ZVLK, where L is the number of labor hours used and K is the number of capital hours used. This function has the resulting marginal products of labor of M PL = J; and marginal product of capital MPK = J; They face prices of 20 dollars per hour for labor and 5 dollars per hour for capital. Ifthey want to produce 12 semi-conductors at minimum cost, what input amounts should they pick and what will the cost be? 2) (20 points total) Suppose there is a perfectly competitive market where firms are currently making a positive economic profit. a) Represent this perfectly competitive market and a single firm in that market with a graph with all of the usual labels. You do not need the AVC curve. (10 points) b) Mark on your graph the individual firm's profits (2 points) Suppose there was an increase in demand for this good. The next questions all refer to this event. c) Show this event on your graph. (3 points) d) What happened to equilibrium market price and market quantity? (3 points) e) What happens to the individual firm's production? (2 points) 3) (20 points total) A firm is operating in the perfectly competitive market for gummy bears. It faces the following conditions: TC(q) = 4+ 16 MC(q) = 8 Market Demand: D(P) = 1008 - 200P Answer the following questions. Suppose market price is currently at $2. a) What is the profit maximizing quantity for the firm to produce at? (4 points) b) What is the profit for the firm at the profit maximizing quantity? (4 points) c) If all firms are identical to this firm, how many firms must there be in the market? (4 points) Consider the long run in this market. Continue to assume all firms are identical. d) What is the long run price for this market? How much do individual firms produce? (4 points) e) How many firms do we expect in the long run? (4 points)4) Consider the following demand for barrels of pretzels: (15 points total) QD=1 00-2P+4PChips'2PNachoChe-ese+ICOlTlC Are pretzels a normal or inferior good? (3 points) What kind of related good are chips? (3 points) What kind of related good is nacho cheese? (3 points) Let m=2, W, and Income=100. What is the demand curve? (3 points) Let the quantity supplied of pretzel barrels be Qs=-20+5P. Solve for the market equilibrium price and quantity. (3 points) sup-99's 5) (15 points) What is an example of a real world occurrence that you think would make an interesting case study? Describe the situation. Why do you think it would be interesting? Of the concepts we have discussed in class so far, which does it do a good job of illustrating? 6) (20 points) Read the Case Exercise entitled Cost Analysis of Patio F umiture at the end of chapter 8 on pages 302-304. Answer questions (1)-(4) at the top of page 304 in detail. (5 points each)