Suppose that the production function for a bakery isQ(L,K)=2L^1/2K^1/2,where Q is the number of loaves of bread produced per day, K is the number of oven hours, and L is the number of worker hours needed per day. Use this information to answer the following questions.

1.Solve for the bakery's optimal combination of workers and ovens in terms of the wage rate (w), rental rate of capital (r), and required output level (Q).

2.Using the functions you found above, determine the optimal amount of labor and capital the bakery will use when the wage is $8, the rental rate of capital is $32, and the daily required output is 60 loaves of bread.

3.Suppose that a new local minimum wage law is being considered by the city government, which would raise the wage level faced by the bakery to $10. What would happen to the bakery's demand for workers and capital if the law passes? You may assume the daily required output remains constant at 60 loaves of bread.

4.A local news reporter says that, since the proposed minimum wage is 25% higher than the current minimum wage, all business in the city will face 25% higher total costs. Determine whether you think the reporter is correct and explain why.