PLEASE ANSWER ONLY QUESTION 8 Section one-theoryA: Key concepts1. What is the difference between production in the short- and long-run?What does it mean for two inputs to be perfect substitutes?2.B: Theory: Cost Minimisation (isocost-lines and production)Note: In the class, I will put capital on the ‘'Y' axis and labour on the 'X' axis. Obviously, the choicedoesn't matter mathematically, but if you want your graph to look like mine, do the same!3. The wage rate is £10 and the capital rate is £20. If a firm was spending £c, show whatcombinations of labour and capital are possible in an equation. Represent the combinationspossible if the firm spent £200, £400, or £600 in a suitably labelled graph.4. A firm has technology such that it can produce... q=L+Ka. What name do we give to this production function?b. Assume output q = 30. Draw the isoquant in a suitably labelled graph.5. Assuming the same wages and technology as before - how much does it cost the firm toproduce q = 30? How much labour does it employ? How much capital?Section two-theory and policyC: The Battle for Ritzy Cinema II this time, it's personnelPatrons at the Ritzy cinema can either buy their tickets at the counter (from a person) or enter theircredit card into a machine, who will print out a ticket. A long line of people would like to work for theRitzy. Ticket machines can be ordered from Germany in 6 months.6. Prior to the battle for wages, the ritzy had two machines and four members of staff. Staffwere paid £50/day while the machines were rented for £10/day. What were the Ritzy'scosts?7. After the battle for wages, the staff were paid £80/day. Assuming that (i) workers andmachines are neither perfect compliments nor perfect substitutes and (ii) the Ritzy doesn'twant to open for fewer hours - outline how the Ritzy might respond in the short run. Howmany workers will it employ? How many machines? What will happen to its costs?8. Outline how the Ritzy cinema might respond in the long-run. (Exact numbers not needed –agraphical explanation is fine.)

Since you have asked us to answer only question 8, we will answer Part C for you since the questions…

Patrons at the Ritzy cinema can either buy their tickets at the counter (from a person) or enter their credit card into a machine, who will print out a ticket. A long line of people would like to work for the Ritzy. Ticket machines can be ordered from Germany in 6 months. 6. Prior to the battle for wages, the ritzy had two machines and four members of staff. Staff were paid £50/day while the machines were rented for £10/day. What were the Ritzy's costs? 7. After the battle for wages, the staff were paid £80/day. Assuming that (i) workers and machines are neither perfect compliments nor perfect substitutes and (ii) the Ritzy doesn't want to open for fewer hours - outline how the Ritzy might respond in the short run. How many workers will it employ? How many machines? What will happen to its costs?