Your firm produces two products,Q₁ and Q₂.An economic consulting firm has estimated your cost function to be $C \left( Q _ { 1 } , Q _ { 2 } \right) = 100 + Q _ { 1 } Q _ { 2 } + Q _ { 1 } ^ { 2 } + Q _ { 3 } ^ { 2 }$ .
a.Are there economies of scope?
b.Are there cost complementarities?
c.Your market for Q₁ is not very good,and an overseas firm has offered to buy the division of your company that produces Q₁.What will happen to your marginal cost of producing Q₂ if you sell the division?

Question

Your firm produces two products,Q₁ and Q₂.An economic consulting firm has estimated your cost function to be

C \left( Q _ { 1 } , Q _ { 2 } \right) = 100 + Q _ { 1 } Q _ { 2 } + Q _ { 1 } ^ { 2 } + Q _ { 3 } ^ { 2 }

.
a.Are there economies of scope?
b.Are there cost complementarities?
c.Your market for Q₁ is not very good,and an overseas firm has offered to buy the division of your company that produces Q₁.What will happen to your marginal cost of producing Q₂ if you sell the division?

Quizplus · Accepted Answer

The Answer of Your firm produces two products,Q₁ and Q₂.An economic consulting firm has estimated your cost function to be $C \left( Q _ { 1 } , Q _ { 2 } \right) = 100 + Q _ { 1 } Q _ { 2 } + Q _ { 1 } ^ { 2 } + Q _ { 3 } ^ { 2 }$ . a.Are there economies of scope? b.Are there cost complementarities? c.Your market for Q₁ is not very good,and an overseas firm has offered to buy the division of your company that produces Q₁.What will happen to your marginal cost of producing Q₂ if you sell the division?

Your Firm Produces Two Products,Q1 and Q2 C(Q1,Q2)=100+Q1Q2+Q12+Q32C \left( Q _ { 1 } , Q _ { 2 } \right) = 100 + Q _ { 1 } Q _ { 2 } + Q _ { 1 } ^ { 2 } + Q _ { 3 } ^ { 2 }C(Q1​,Q2​)=100+Q1​Q2​+Q12​+Q32​

Your Firm Produces Two Products,Q₁ and Q₂ $C \left( Q _ { 1 } , Q _ { 2 } \right) = 100 + Q _ { 1 } Q _ { 2 } + Q _ { 1 } ^ { 2 } + Q _ { 3 } ^ { 2 }$