Question: Suppose a firm is producing computer monitors utilizing the following technology:

a. What returns to scale is the firm producing under?

b. Does the calculated marginal product of labor depend on the amount of capital being used? Define marginal product in answering the question.

c. Derive the function for the firm's marginal rate of technical substitution (MRTS):

d. Derive the long run total cost function for the firm.

e. Derive the conditional demand equations for the inputs L (labor) and K (capital).

f. Confirm using calculus that both input demand curves slope downward.

Suppose the cost of labor is w=$64/per hour and the cost of capital, r=$125/per hour. The firm produces 1000 computer monitors per time period.

g. Calculate and illustrate (on an isoquant/isocost diagram) the input mix the firm would use at the least cost method of producing monitors.

h. Calculate the cost to the firm of producing the one thousand monitors using the least cost method.