Your friend Gus Fring decides to close Los Pollos Hermanos to open a flower shop. Gus's production function in the flower shop is = (, ) = 13 13 where the output of his shop, q, is the units of flower arrangements, L is the number of labour hours spent arranging flowers, and K is the units of equipment used in production. The price of L is w > 0, and the price of K is r > 0 per unit. Answer each question worth 1 mark each - for a total of 10 marks. a. Explain to Gus the difference between short-run and long-run in the theory of production. b. Explain economies of scope. How can Gus's flower shop achieve economies of scope? c. Based on Gus's description of the flower market, you suggest that he can assume a perfectly competitive market environment. Under what conditions might this be a reasonable assumption for Gus to make? d. Explain to Gus what you mean when you say "The cost of using an input is always its opportunity cost". e. Explain to Gus what an isoquant is. On a graph with L on the horizontal axis and K on the vertical axis, illustrate an isoquant that represents a particular production level . What is the equation for this isoquant? f. What is the equation for a slope of an isoquant? Is it constant? What does the slope indicate? Explain. g. Explain to Gus what an isocost line is. On a graph with L on the horizontal axis and K on the vertical axis, illustrate an isocost line that represents a particular level of production cost C. What is the slope of this isocost line?