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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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There are economies of scope if SCOPE = ...

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