MG 640 Managerial EconomicsHomework AssignmentWeek 5 Chapter 5: Production Process and CostsFor this

MG 640 Managerial EconomicsHomework AssignmentWeek 5 Chapter 5: Production Process and CostsFor this week read Chapter 5.Answer the following questionsQuestion 1Amazon sells e-books $3 per unit in a highly competitive market. Itproduces e-books using capital (which it rents at $ 5 per hour) andlabor (which is paid a wage of $20 per hour under a contract for 10hours of labor services). Complete the following table and use thatinformation to answer the questions that follow. K L Q 1010101010101010 01234567 050150300400450475475 MPL APL APK VMPL 10101010 891011 450400300150 a. Identify and define the fixed and variable inputs. WHY? b. What are the firm’s fixed costs? WHY? c. Define variable cost? What is the variable cost of producing 450units of output? WHY d. How many units of the variable input should be used to maximizeprofits? SHOW WORKe. What are the maximum profits this firm can earn? SHOW WORKf. What is diminishing marginal returns? Over what range of thevariable input usage do increasing marginal returns exist? WHY? Agraph may also be usefulg. Define the value of marginal product of labor and then complete itscolumn in the table above. Question 2There is no difference between the law of diminishing marginal returnsand the law of diminishing marginal rate of technical substitution. True or False. Explain and offer examples to further illustrate yourexplanation. Home Assignment/Drop Box Instructions:Homework is due in the weekly Drop Box by the end of SaturdaySave homework as a pdf Word file and then upload in the Drop Box