Suppose the Total Cost of Producing Goods Q₁ and Q₂

question 70

Essay

Suppose the total cost of producing goods Q₁ and Q₂ jointly is given by TC = 100 + 50Q₁Q₂ - (Q₁Q₂)^0.5. The total cost of producing Q₁ and Q₂ in two separate facilities is given by TC = 75 + 3,000Q₁ + 1,000Q₂ + Q₁² + Q₂². Use the SCOPE measure to determine whether there are economies or diseconomies of scope for Q₁ = 10 and Q₂ = 20.

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