1) Use the cobb-Douglas production function (q = AL^aK⁸, where q is output of the firm, L is labor and K is capital, and A, B, and A are constant) to find the cost-minimizing bundles of labor and capital.

2) Suppose that the government sets a price, p₂, that is below the socially optimal level, p_1, but above the monopoly's minimum average cost. Compare the price, the quantity sold, the quantity demanded, and the welfare under this regulation to those under optimal regulation? Use diagram, and tables (welfare analysis) to support the answer.