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Doug wants to go into the donut business. For $500 per month he can rent a...

Doug wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K=l). He must pay unionized donut bakers a monthly salary of $400 each. He projects his production function to be Y = 5KL (where Y is tons of donuts).

A) How many donuts does Doug need to produce in order for K=4 to be the optimal level of capital?

B) What is Doug's monthly long-run cost function AND long-run marginal cost?

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