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Suppose a firm has the production technology shown below for Goods 1 and Goods 2 and respond to the following with an explanation for answer.
Good 1 Good 2 Both
Q1 Cost Q1 Cost Q1 Q2 Cost
10 50 10 60 10 10 100
20 100 20 100 20 20 180
30 150 30 130 30 30 250
1. Does Good 1 indicate economies of scale? Why or why not?
2. Does Good 2 indicate economies of scale? Why or why not?
3. Do the two goods indicate economies of scope? Why or why not?
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The World of Videos operates a retail store that rents movie videos. For each of the last 10 years, World of Videos has consistently earned profits exceeding $30,000 per year. The store is located on prime real estate in a college town. World of V..
Suppose that upon entering the European Union (EU), it is discovered that the cost of automobile production in Poland is €14,000 while it is €20,000 in Germany. Suppose that the EU, which has a customs union, has an X percent tariff on automobiles..
Make sure you give complete definitions and explanations for this set of questions. When dealing with thedecrease in income, you will want to talk about the effects on thebudget constraint and the consumption bundle of the consumer.
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