To do this, firms have to choose the level of output to bring to the market, which depend on p but also r, w. For now, we focus on optimal output level as a function of the price of the output good. This is the firm"s optimal supply q* (p) P = q* (500) = 1000 units. Recall assumptions about price-taking firm firm takes prices (p, w, r) as fixed firm acts to maximize profit: = r c = pq wl rk, choose q, l, k. Long run profit maximization firm solves: max p, l, k pq wl rk subject to q = f (l, k): isoquant. Problem is equivalent to: max q pq c lr (q, choose q, l, k. Short run profit maximization firm solves: max p, l, k pq wl rk (bar) subject to q = f (l, k (bar) ): isoquant. Problem is equivalent to: max q pq c sr (q)