The USPS coordinates and delivers packages to every address in America. For their warehouse, they are deciding how many robots (K) and how many workers (L) to hire. Postal workers earn $25 an hour, whereas robots are rented at a rate of $40 an hour.

a. The USPS's production function is Cobb-Douglas,

= 4*^(0.25)* ^(0.75) . The marginal products are (K) = 3(/K)^(0.25) and (L) = (/L)^(0.75). Use the tangency condition and the production

constraint to calculate the cost minimizing input demands workers and robots in terms of Q.

b. For any given quantity of packages delivered, which do they use more, workers or robots?

c. Graph the isoquant and the isocost curves. Assume = 1 Million. Label the cost minimizing bundle of Labor and Capital. Label the intercepts of the isocost. Interpret the Labor axis intercept from the isocost.