Final answer:
In the scenario given, we are asked to find the cost-minimizing conditional factor-demand functions for producing digital edits using desktop computers and laptops.
Step-by-step explanation:
In this scenario, we are given a production function that models the production of successful digital edits using desktop computers and laptops. The function is f(x1, x2) = 3x1 + x2, where x1 represents desktop computers and x2 represents laptops.
For the cost-minimizing conditional factor-demand functions to produce y digital edits, we need to consider two cases:
Part 1: When w1/w2 < 3 (desktops are usually more expensive but not three times as expensive as laptops), the cost-minimizing conditional factor-demand functions are:
x1(w1, w2, y) = y
x2(w1, w2, y) = y* w2/w1
Part 2: When w1/w2 > 3 (desktops are now more than three times as expensive as laptops), the cost-minimizing conditional factor-demand functions are:
x1(w1, w2, y) = y/3
x2(w1, w2, y) = y
Complete question is:
Digital editing can be completed on desktop computers, which offer faster processing but less flexibility for workers, or laptops, which offer greater flexibility but slower processing. The production of successful digital edits can be modeled with the function f(x1,x2)=3x1+x2, where x1 represents desktop computers and x2 represents laptops.
1st attempt
Part 1
Desktops are usually more expensive than laptops. However, they rarely cost three times as much. It is safe to assume then that:
w1/w2 < 3
Under that assumption, what are the cost-minimizing conditional factor-demand functions to produce y digital edits?
x1(w1, w2, y) =
Choose one:
A. y
B. y *w2/w1
C. 0
D. y/3
E. y* w1/w2
x2(w1, w2, y) =
Choose one:
A. y/3
B. y* w1/w2
C.y *w2/w1
D. 0
E. y
Part 2
Suppose now that new production technology decreases the price of laptops dramatically so that the desktops are more than three times as expensive as laptops. Formally, we are now assuming that is w1/w2 > 3.
What are the cost-minimizing conditional factor-demand functions to produce y digital edits?
x1(w1, w2, y) =
Choose one:
A. y
B. y *w2/w1
C. 0
D. y/3
E. y* w1/w2
x2(w1, w2, y) =
Choose one:
A. y/3
B. y* w1/w2
C.y *w2/w1
D. 0
E. y