aTc MC(q)=aq =2200. b.How many teams are required to produce 250 engines?What is the average cost per engine? Toprodu2 ngne we need labor teams10.Average cost are given by 4Cg=250)=5000+20250-240 250 c.You are asked to make recommendations for the design of a new production facility. What capital/labor (KL)ratio should the new plant accommodate if it wants to minimize the total cost of producing any level of output g? We no longer assume that Kis fixed at 5.We need to find the combination of K and L that minimizes costs at any level of outputq.The cost-minimization rule is given by MPMP w To find the marginal product of capital,observe that increasing K by 1 unit increases q by 5L,so MPK=5L.Similarly,observe that increasing L by 1 unit increases Q by 5K,so MPL=5K.Mathematically, Using these formulas in the cost-minimization rule.we obtain 5000 r The new plant should accommodate a capital to labor ratio of I to 2.Note that the current firm is presently operating at this capital-labor ratio. 9.The short-run cost function of a company is given by the equation TC=200+55q,where TC is the total cost and q is the total quantity of output,both measured in thousands a.What is the company's fixed cost? When=0.TC=200.so fixed cost is equal to 200.000) b.If the company produced 100,000 units of goods,what is its average variable cost?  MC(q) = TC q = 2200. Marginal costs are constant and average costs will decrease as quantity increases (due to the fixed cost of capital). b. How many teams are required to produce 250 engines? What is the average cost per engine? To produce q = 250 engines we need labor teams  L = q 25 or L=10. Average costs are given by  AC(q = 250) = 50,000 + 2200(250) 250 = 2400. c. You are asked to make recommendations for the design of a new production facility. What capital/labor (K/L) ratio should the new plant accommodate if it wants to minimize the total cost of producing any level of output q? We no longer assume that K is fixed at 5. We need to find the combination of K and L that minimizes costs at any level of output q. The cost-minimization rule is given by MP r = MP w . K L To find the marginal product of capital, observe that increasing K by 1 unit increases q by 5L, so MPK = 5L. Similarly, observe that increasing L by 1 unit increases Q by 5K, so MPL = 5K. Mathematically,  MPK = Q K = 5L and MPL = Q L = 5K . Using these formulas in the cost-minimization rule, we obtain:  5L r = 5K w  K L = w r = 5000 10,000 = 1 2 . The new plant should accommodate a capital to labor ratio of 1 to 2. Note that the current firm is presently operating at this capital-labor ratio. 9. The short-run cost function of a company is given by the equation TC=200+55q, where TC is the total cost and q is the total quantity of output, both measured in thousands. a. What is the company’s fixed cost? When q = 0, TC = 200, so fixed cost is equal to 200 (or $200,000). b. If the company produced 100,000 units of goods, what is its average variable cost?