Question 1 Julie's company produces knee warmers according to the following production function: q = (K 8)L = (a) Assuming that the unit cost of capital (r) and the unit wage (w) are both equal to 1, derive Julie's demand for inputs capital and labor, respectively as a function of her choice of output (q). 5 points. (b) What is Julie's long run total cost function. 5 points. The demand for knee warmers is given by P = 40Qd. There are no costs of entry or exit for a firm on the market for knee warmers. Any firm in this market will have access to the same technology as Julie. (c) What will the price be in the long run in this market? How much will each firm produce in this market in the long run. 5 points. (d) How many firms will there be in this market in the long run? . 5 points. Question 1 Julie's company produces knee warmers according to the following production function: q = (K 8)L = (a) Assuming that the unit cost of capital (r) and the unit wage (w) are both equal to 1, derive Julie's demand for inputs capital and labor, respectively as a function of her choice of output (q). 5 points. (b) What is Julie's long run total cost function. 5 points. The demand for knee warmers is given by P = 40Qd. There are no costs of entry or exit for a firm on the market for knee warmers. Any firm in this market will have access to the same technology as Julie. (c) What will the price be in the long run in this market? How much will each firm produce in this market in the long run. 5 points. (d) How many firms will there be in this market in the long run? . 5 points