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

Your firm produces two products, Q<sub>1</sub> and Q<sub>2</sub>. An economic consulting firm has estimated your cost function to be a. Are there economies of scope? b. Are there cost complementarities? c. Your market for Q<sub>1</sub> is not very good, and an overseas firm has offered to buy the division of your company that produces Q<sub>1</sub>. What will happen to your marginal cost of producing Q<sub>2</sub> if you sell the division?

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 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

Your Firm Produces Two Products, Q₁ and Q₂