$10 + 9 Arc _ ATC ATC 8 T 6 5_ 4 3 2 1 _ 0 4IlllIlll) Kilowatts 0 l 2 3 4 5 6 7" 8 per hour (millions) 4. (12 points) In the wake of the energy crisis in California in 2000 and 2001, many electricity- generating facilities across the nation periodically reassess their projections of future demand and capacity for electricity in their respective markets. As a manager at Florida Power & Light Company, you are in charge of determining the optimal size of two electricity generating facilities. The figure above illustrates the short-run average total cost curves associated with different facility sizes. Demand projections indicate that 6 million kilowatts must be produced at your South Florida facility and 2 million kilowatts must be produced at your facility in the Panhandle. Determine the optimal facility size (S, M, or L) for each of these two regions, and indicate whether there will be economies of scales, diseconomies of scale, or constant returns to scale if the facilities are built optimally. 5. A multiproduct firm's cost function was recently estimated as C (Q 1, Q2) = 85- 0.5Q ,Q2 + 0.3Q , +0.40Q2 5.1. (5 points) Are there economies of scope in producing 10 units of product 1 and 10 units of product 2? 5.2. (5 points) Are there cost complementarities in producing product 1 and product 2? 5.3. (5 points) Suppose the division selling product 2 is floundering and another firm has made an offer to buy the 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