Q1. A firm uses the following technology Q = VKL and currently has its capital fixed at K = 5. Assume that the price of capital is r = 5 and the price of labour is w = 1. Further assume that the total costs are given by TC = rK + WL. a) Derive the expressions for the short-run total, variable, and fixed costs curves and sketch them on one graph. [3 marks] b) Derive the expressions for the short-run average variable costs, average fixed costs, and marginal costs curves and sketch them on a different graph [3 marks] c) Explain what economists mean by the law of diminishing returns. How, if at all, it is related to the shape of the marginal and fixed costs curves? [2 marks] d) Does the production function Q = vKL satisfy the law of diminishing returns in the short run? [2 marks]