Suppose that the market for apples is perfectly competitive. Production of apples requires two inputs:

workers (L) and land (K). The production function for apples is:

F(K,L)=3K^(1/3)* L^(2/3)

A) Suppose that W=4, R=16, and in the short-run, K=27. Find the firm’s short-run cost function SRC(q)

and short-run marginal cost function SRMC(q).

B) What is the optimal production of apples if P=4? What are consumer surplus and profit?

C) Find the firm’s short-run supply of apples Q(P) when W=4, R=16 and K=27.

D) Find the firm’s long-run cost function LRC(q) and long-run marginal cost function LRMC(q) when W=4

and R=16. How do these compare to the firm’s short-run cost function and marginal cost function?

E) Find the firm’s long-run supply of apples q(P) when W=4 and R=16.