The rm chooses how many units of the production input, 71,, to purchase upfront from its supplier and how many units n; it Wishes to contract for delivery from the intermediary that will arrive only in the event that the supplier cannot fully deliver the its units of inputs. The rm borrows from the bank to pay for the cost pns 'l' an- Nature reveals whether the supplier fully delivers 71,. If so, production occurs, output is sold and the bank is repaid principal and interest, (1 + r)b. Otherwise, the supplier delivers (ns units of inputs, the intermediary delivers 71; units of inputs, production occurs, the rm pays the intermediary p171; for delivery of the n; inputs and the bank is repaid principal and interest, (1 + r)b The problem of the firm can then be written as max {T [f(ns) - (1 + r)bs] + (1 - ) [f(ons + nI) - pinI - (1+r)bs]} ns,nI,bs subject to the constraint Pons + qn1 = b.v Combine the rstorder conditions with respect to us and b to construct an n5 b tradeoff condition. Interpret this optimality condition in words. vi Combine the rst-order conditions with respect to m and b to construct an an b trade-off condition. Interpret this optimality condition in words. vii Why would the production rm contract for delivery of inputs from the intermediary