Does the firm possess economies of scope

Reference no: EM131889902

Question: Suppose a firm produces two goods and has the cost function, TC = 15Q₁+ 15Q₂ (the quantities of the two goods are given by Q₁ and Q₂).

a. Does the firm possess economies of scale in the production of good 1?

b. What is the average incremental cost for good 1 when Q₁ = 10 and Q₂ = 10?

c. Does the firm possess economies of scope?

Reference no: EM131889902

Questions Cloud

Will you allow companies to sell potentially dangerous gas : Suppose you are a government official of a small but fast growing emerging economy. A company wants to come to your country to start selling a clean fuel.

How to characterize the range of volumes : Find the break-even volume and characterize the range of volumes for which it is more economical to produce or to outsource.

Target capital structure and yield to maturity on bonds : Target capital structure: 47% debt, 8% preferred stock and 45% common equity. Yield to maturity on bonds: 8.0%; Preferred stock dividend: $6.40 per year;

Define additional number of patients that need to be sampled : Suppose a hospital would like to estimate the proportion of patients who feel that physicians who care for them always communicated effectively when discussing.

Does the firm possess economies of scope : Suppose a firm produces two goods and has the cost function, TC = 15Q1 + 15Q2 (the quantities of the two goods are given by Q1 and Q2).

Decide which jobs should perform which tasks : Suppose you are the assistant manager of a medical equipment and supply company that operates a store and warehouse in Columbus, Ohio.

Satisfy your required rate of return : How much will the stock price have to appreciate for you to satisfy your required rate of return of 18 percent?

What are the payoffs of the call option : What are the ending values of the stock price? What are the payoffs of the call option?

How much milk should be purchased : Supermarket sells, 2% milk, which is delivered daily. The daily demand is uniformly distributed between 100 and 200 gallons.

User Account

All Pages