q = F(K, L) = (2K)^0.5 (2L)^0.5 /100. In the short run, capital (studios, gear) is fixed at a level of 100. It costs $40 (in thousands) to rent a unit of capital and $10 (in thousands) to hire a unit of labor (actors, stuntmen, camera crew etc.).
Question: (a) What is the fixed cost? What is the variable cost as a function of output q?1