Suppose, instead, that Nestle currently makes chocolates, and is considering merging with Elf, a company that currently manufactures wafers. The costs for Nestle to produce all chocolates and no wafers is: CN estle(qchoc, 0) = 4 q2 choc (1) The costs for ELF to produce all wafers and no chocolates is: CELF (0, qwaf er) = 4 qwaf er (2) If the firms merge, and produce both chocolate and wafers under one combined company, the newly combined firm (NestlELF) faces the following costs: CN estlELF (qchoc, qwaf er) = 7 q2 choc qwaf er (3) *Assume there are no other costs associated with the merger* 12. Does Nestle's production of chocolate exhibit economies of scale? Explain your reasoning. 13. Does ELF's production of wafers exhibit economies of scale? Explain your reasoning. 14. Are there economies of scope associated with producing both Chocolate and Wafers within one firm? Explain your reasoning. 4