Q = 6KL Where Q = annual our production measured in pounds, K = machine hours of capital and L = number of labour hours. The rm estimates a $30 per hour rental rate on capital and its wage rate is $7.50. The operating budget for capital and labour is $300,000 per year. a) Determine whether the production function exhibit increasing, decreasing or constant returns to scale. Provide sufcient evidence for your answer. (5 marks) b) Determine the rm's optimal ratio of labour to capital. (3 marks) c) Given the rm's $300,000 budget, how much capital and labour should the rm employ? How much output will the rm produce? (6 marks) d) Due to increased demand for capital, the rental rate for capital increases to $45.00. How much capital and labour should the rm now employ? (4 marks) e) What is the new output level given the increase in the rental rate? (2 marks)