A monopoly uses Kryptonite and labor as the inputs to produce Soma. If K is the number of

units Kryptonite used and L is the number of units of labor used, the amount of Soma that will

be produced is given by f(K; L) = 5K^3/4L^1/4. Let $2 be the unit price of Kryptonite and $1 be the

unit price of labor.

1. Write down the rm's optimization problem for determining the minimum cost mix of labor

and Kryptonite to produce q units of Soma. [2 points]

2. LetC(q) denote the minimum cost of producing q units of Soma. Derive an expressionfor

C(q) as a function of q.[6 points]

3.What kind of economies to scale does C(q) exhibit?