Q#1 (40 marks) Suppose the firm's production function is given as Q = 10KL , where L is labor, K is capital. 1) Calculate the elasticity of substitution of this production function. (5marks ) 2) What is the equation of the isoquant corresponding to this production function? (5marks ) 3) What type of return to scale does this production exhibit? And Why? ( 5marks ) 4) Derive the long run total cost function. (5 marks) 5) What is the long run average and marginal cost functions? (5 marks) 6) Suppose that capital is fixed at a level K . What is the short run total cost function for this production function. (5 marks) 7) What is the short run average variable cost and short run average fixed cost functions? (5 marks) 8) Suppose that the price of labor w=$5 and the price of capital r =$20. What is the cost- minimizing input combination if the firm wants to produce 50 units? ( 5 marks) Question #5 ( 10 marks) Assume the market demand is P = 190 - 0.010. Suppose we have a monopolist with two plants. Plant I's total cost is given as TC, = 150,000 + 400, + 0.01 Q] Plant 2's total cost is given as TCz = 125,000 + 200, + 0.02 Q] I) What is the total output that maximizes the monopolist profit? What price should it charge? And how much profit/loss does it achieve? (5 marks) 2) How much should the monopolist produce in each plant? (5 marks) Question #6 (30 marks) Assume we have a monopolist in the market who faces a market demand P = 20 - 20. His marginal cost is $2, and has a fixed cost of $30. 1) Suppose the monopolist's objective is to maximize profit. What quantity should it produce and what price should it charge? (5 marks) 2) How much is the learner's index of monopoly power? (5 marks) 3) Calculate the price elasticity of demand at the monopolist profit maximizing quantity. (5 marks) 4) Suppose instead of having monopoly the market was perfectly competitive. What quantity should a firm produce and what price should it charge? (5 marks) 5) How much is the deadweight loss that result from the monopoly? (5 marks) 6) Now suppose the monopolist's objective is to maximize total revenue. What quantity and price achieve this objective