Consider a rm with production function (Cobb-

Douglas)

q=K^(1/2)L^(1/2)

Suppose that one unit of capital costs r = 12.5, whereas one unit of labor costs w = 8.

(a) Determine the optimal input mix that leads to an output of q = 2.

(b) Determine the rm's cost function, that is, the minimum cost required to

produce output q.