A multiproduct firm’s cost function was recently estimated as
C (Q1, Q2) = 90 - 0.5Q1 Q2 + 0.4Q21 + 0.3Q2 2
a. Are there economies of scope in producing 10 units of product 1 and 10 units of product 2?
b. Are there cost complementarities in producing products 1 and 2?
c. Suppose the division selling product 2 is floundering and another company has made an offer to buy the exclusive rights to produce product 2. How would the sale of the rights to produce product 2 change the firm’s marginal cost of producing product 1?

  • CreatedApril 18, 2014
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