Sarah runs a widget factory. Widgets are produced using only labor, L, and capital, K, according to the production function: F(L, K) = (2L) ^0.6 (K)^0.5

a) Draw isoquants for 10, 20, and 30 widgets.

b) Does this production function exhibit increasing, decreasing, or constant returns to scale?

c) Suppose Sara is stuck with her current level of capital K = 16 and that the wage per unit of labor is $18.

i) Calculate her variable and marginal costs as a function of her output.

ii) If widgets sell for $60 each what is Sarah's profit maximizing level of output.

iii) If her fixed costs are $160, what is Sarah's profit at her profit-maximizing output?