Suppose a firm has multiproduct cost function that is additive such that C(q₁,q₂) = C(q₁) + C(q₂). What is the degree of economies of scope (SC) for this firm?

Question

Quizplus · Accepted Answer

With an additive cost function, there is no economies of scope. This means that producing multiple products does not result in cost savings or efficiency gains compared to producing each product separately. Therefore, the degree of economies of scope is zero.

Suppose a Firm Has Multiproduct Cost Function That Is Additive