Sunshine Berhad produces biscuits. The production function is Q=85K^0.8 L^0.6 where Q is the output measured in boxes, L is the labour measured in working hours and K is the capital measured in machine hours. Wages are RM20 per hour, machine charges are RM30 per hour and the cost of production is RM105,000.

a)Calculate the optimum combination of labour and capital. (3 markah/marks)

(b) If the wages per hour increases by 35 percent, calculate the new combination of inputs and changes in firms output.

c) Based on your answers in (i) and (ii), show the optimum production points in a diagram.