A firm uses two inputs, K and L, and only L can be varied. The table below shows the output that can be obtained by using additional units of L wiTha fixed amount of K. The firm sells its output in a...

A firm uses two inputs, K and L, and only L can be varied. The table below shows the output that can be obtained by using additional units of L wiTha fixed amount of K.

The firm sells its output in a perfectly competitive market where the ruling price is 20p. How much of L will be used if the cost per unit of L is (a) £4.00, (b) £2.00, (c) £8.00? What would the cost per unit of L be if the firm found the optimal usage of L to be 6? What is likely to happen to the amount of L employed if (a) the demand for the finished product increases and (b) the amount of K used is increased?