Suppose a new piece of computer softwaresay a word processor with perfect speech recognition can be created for a onetime cost of $100 million. Suppose that once it is created, copies of the software can be distributed at a cost of $1 each. 2.1 Production function If Y denotes the number of copies of the computer program produced and X denotes the amount spent on production, what is the production function; that is, the relation between Y and X? 2.2 Production function Make a graph of this production function. Does it exhibit increasing returns? Why or why not? 4 (millions) Output, Y Input, X (millions) 20 40 60 80 100 50 100 150 200 2.3 Scale Suppose the firm charges a price of $20. How many copies does it have to sell in order to break even? What if the price is $100 per copy? Why does the scale of the marketthe number of copies the firm could sellmatter