6.An electricity generating firm estimates its production function to be:

Where Q is output in kilowatt hours, K is capital and F is fuel.The rental cost of capital is $16 per hour and fuel is 4 per litre.

a)Determine the firm's optimal ratio of fuel to capital.

(40 percent of marks)

b)Given a budget of 352 a month, determine the quantities of capital and fuel required to maximise the budget constraint of the firm.

(40 percent of marks)

c)In addition to not exceeding the budget, the firm is required to produce enough electricity to satisfy the level of demand at current prices.The current level of demand is 2500-kilowatt hours.Is the firm able to achieve its target level subject to the budget constraint it faces.

(20 percent of marks)