Suppose that Hannah and Sam have the production function Q=F(L,K) Q=10L0.5K0.5. The wage rate is $1,000 per week and a unit of capital costs $4,000 per week.
a. True or false? If we plot L along the horizontal axis and K along the vertical axis, then Hannah and Sam's output expansion path is a straight line that passes through the origin and has a slope of 0.25.
b. What is their cost function? Choose from the options below.
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