Woodmaster uses labour (L) and capital (K) to produce furniture (Q). Woodmaster's production function is given by Q= (K + La')Lla' where L > 0, K > 0,Q > 0. Suppose a = 0.69. (a) (0.25 points) The production function exhibits which returns to scale? Oa. constant Ob. increasing Oc. decreasing {b) (0.25 points) Suppose w and r are prices of L and K. Let (w, r, ) denote the cost function associated with Woodmaster's production function. The average cost of production, i.e. e(w, r, @)/Q Oa. is decreasing in Ob. is increasing in Q Oc. does not change with @ Write your answers to 3 decimal places. (c) (0.5 points) To minimise costs, Woodmaster uses labour (L) and capital (K) in equal amounts. Then it must be the case that % E