4. An electronic plant’s production function is Q=5LK, where Q is its output, L is the amount of labor, and K is the amount of capital. The price of labor is $1 per unit of labor, and the price of capital is $2 per unit of capital. 

• a) What returns to scale does the above production function exhibit? Explain your answer               (2)
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• b) Given the production function, the firm’s vice president asks you whether 80 units of labor and 30 units of capital will give the maximum amount of output, given the total expenditure that can be made on labor and capital is $400. Do you think that the above-mentioned amounts of labor and capital maximize output given the cost of $400? Explain your answer. If you think this is not optimal, what reallocation would you make in labor and capital amounts? (3)
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