Jack & Jill Well Drilling, LLC is a company that drills water wells. The firm uses 2 inputs; labor (*L*) that costs $25 per unit and capital (*K*) that costs $100 per unit. The company's production function is given by (*Q* is drilling depth in **hundreds** of feet, *Q* = 2 means 200 feet)):

Q = L ^ 3/4 K^1/4

a. Write out the expression for the isoquant for 400 feet of drilling (remember *Q* is drilling depth in **hundreds** of feet).

a. If Jack & Jill intend to drill 400 feet of well and they have 4 workers hired, how many units of capital will they have to hire?

Suppose Jack & Jill have 4 permanent employees (long-run choice with contracts for these workers over the next 5 years). What are the short-run *AVC* and *ATC* functions? **Hint:** Costs are a function of the level of ** output** produced so your functions should be in terms of

*Q,*not

*K*and/or

*L*. That is, in general, what is the average variable and average total cost for

**arbitrary level of output**

*any**Q*(hence, the functions should only involve

*Q*)?

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