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Raync8780
Raync8780
17.04.2020 • 
Mathematics

A mail-marketing company combines two inputs, pre-stamped envelopes (input 1) and printed marketing campaign material (input 2). Every envelope can be stuffed with three pieces of paper. That is, the number of marketing mailers is determined by the following production function:

y= min {x1, x2/5 }

where y stands for the number of mailers, X1 stands for the number of pre-stamped envelopes, and x2 stands for the number of sheets of paper.

a. Let the cost of a pre-stamped envelope be , and the cost of printing one sheet of paper with marketing material be ω. Also, suppose that the firm already printed 100 sheets of paper with marketing material. In the short run, at most the firm would be able to produce marketing mailers. To produce this number of mailers, the firm would need to purchase pre-stamped envelopes.

Suppose now that the firm wants to produce 16 marketing mailers. To do this, the firm would have to purchase stamped envelopes when compared to Part 1. Which of the following statements are correct?

a. For this question, the conditional input demand for input 1 depends positively on the per-unit cost of input 1 (ω1).
b. For this question, the conditional input demand for input 1 is independent of the price the firm charges for producing each mailer (price of y).
c. For this question, the conditional input demand for input 1 depends positively on the amount of output (y).
d. For this question, the conditional input demand for input 1 depends positively on the per-unit cost of input 2 (ω2).
e. For this question, the conditional input demand for input 1 depends negatively on the per-unit cost of input 2 (ω2).
f. For this question, the conditional input demand for input 1 depends negatively on the per-unit cost of input 1 (ω1).

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