Essay
Bridget's Brewery can jointly produce dry stout and sweet stout. The cost function for joint production is: where
is the quantity of dry stout and
is the quantity of sweet stout that Bridget produces. If the brewery produces dry stout alone, the firm's cost function is:
(
) = 6
. If the brewery produces sweet stout alone, the cost function is:
(
) = 8
. Calculate Bridget's degree of economies of scope if she produces 27 units of dry stout and 64 units of sweet stout.
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