Producer Behaviour

(a)Catalina films produces video shorts using digital editing equipment (K) and editors (L).The firm has the following production function:

Where Q = hours of edited footage.If the wage rate is $25 per editor/hour and the rental rate on digital editing equipment is $50 per unit, what is the lowest possible cost for Catalina films to produce 3,000 hours of edited footage?Show all your work. (8 marks)

(b)A more general form of the Cobb-Douglas production function is given as:

Where A, , and are positive constants.For what values of and will the production function exhibit diminishing marginal returns to capital and labour?Show all your work. (7 marks)