Problem
1. Can a Cobb-Douglas production function possess varying returns to scale? Explain!
2. Assume that the Cobb-Douglas production function for a beer manufacturer is q = 1.52 L^0 6 k^0.4. Calculate the average fixed cost if we also assume that the firm's capital is fixed at 250 units and the rental rate of capital is $5 per unit.
3. Discuss and explain the situation involving the tangency between the isocost line and the isoquant.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.