A firm produces two goods Q₁ and Q₂. For economies of scope to occur, it must be TRUE that:

Name: A firm produces two goods Q 1 and Q 2 . For economies of scope to occur, it must be TRUE that:
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Question

Quizplus · Accepted Answer

The condition for economies of scope requires that the total cost of producing both goods together is less than the sum of the costs of producing each good separately. Therefore, option A, which states that TC(Q₁,0) + TC(0,Q₂) > TC(Q₁,Q₂), is the only choice that correctly expresses this condition.

A Firm Produces Two Goods Q1 and Q2

A Firm Produces Two Goods Q₁ and Q₂