Question 12INTEL Corporation is a manufacturer of microprocessor and uses both labor and capital to produce its goods for the global market. INTEL's production function is given by

Q=1000^0.35 K^3.6

whereQis the quantity of microprocessor (in '000 units) produced,Lis the amount of labor used andis the amount of capital used by INTEL.

(a)Determine degree of homogeneity of INTEL's production function.

(b)Does INTEL's production function exhibit decreasing, increasing or constant returns to scale? Explain your answer.

(c)Obtain the marginal product of each input used in the production of microprocessor and calculate the marginal rate of substitution of labor for capital.

(d)Derive the average product of labor (AP_L), average product of capital (AP_K)and marginal product of labor (MP_L) in terms of LandK.

(e)Suppose the price per unit of labor (P_L) is $100,K=800 and L=400, what is the marginal cost of producing an extra microprocessor?