Problem 1 (50 points) Alex is working for a marketing department of a large retailer. He spends money on online ads A and TV ads T to "produce" customers for his employer. The production function is given by f(,T)=10,0001/4T1/2 where A is measured in thousands of ad clicks and T is measured in seconds of ad run time. 1 Prices are given by pA=$1,000,pT=$500 (a) Does this marketing department have increasing or decreasing (or constant) returns to scale? Explain. (b) Find the technical rate of substitution between the two types of advertising A and T. (c) Find the cost-minimizing combination of ads. (d) If Alex's boss wants to generate 160,000 customers, what is the least amount of money Alex would need to achieve that goal