Suppose the cost of producing two goods,x and y,can be represented as C = ax + by + cxy.If the measure of economies of scope,SC,is zero,then which of the following must be true?
A) a = b
B) a + b = -c
C) c = 0
D) a = -b

Question

Quizplus · Accepted Answer

If the measure of economies of scope is zero, it implies that there are no joint cost savings by producing both goods together. Therefore, the term cxy must be zero, which means c = 0.

Suppose the Cost of Producing Two Goods,x and Y,can Be