- You are considering opening a factory for production of books. The production function is described by the followhig function: f(K, L) = K2/3L1/3 In the short run capital is xed at K0 2 4. The rental rates of capital and labor are 1; = $100 and w = $50 respectively. (a) | -' Draw the total product, average product, and marginal product of labor curves for the production function. (h) \\ At. what level of labor does the law of diminishing returns takes effect? (c) ' ' Calculate the range of values of labor over which Stages 1, II and III of production occur. (d) ' _ ' Find the factory's labor demand function in the short run and use it to nd the shortrun cost function. (e) What is the short run supply function (13(3)) where p is price? (f) J If p = $3750 how many books will you supply? What would be your prot? Will you choose to shut down in the short run? (g) [- 7 , If p = $150 in the long run, will you choose to shut down? If not, how many books will you produce