Economies of scope exist when: A) C(Q₁) + C(Q₂) C(Q₁,Q₂).

Question

Economies of scope exist when: A) C(Q₁) + C(Q₂) < C(Q₁,Q₂). B) C(Q₁) − C(Q₂) < C(Q₁,Q₂). C) C(Q₁) + C(Q₂) > C(Q₁,Q₂). D) C(Q₁) − C(Q₂) > C(Q₁,Q₂).

Quizplus · Accepted Answer

Economies of scope exist when the average cost of producing two or more products together is less than the cost of producing each product separately. This can be represented mathematically as C(Q₁) + C(Q₂) < C(Q₁,Q₂). Therefore, option C is the correct choice as it represents the condition for economies of scope to exist.

Economies of Scope Exist When