10.3

a. Explain in words why this mathematical formulation implies that costs will be lower in this multiproduct firm than in two single-product firms producing each good separately. +92.

b. If the two outputs are actually the same good, we can define total output as q Suppose that in this case average cost (= C/q) falls as q increases. Show that this firm also enjoys economies of scope under the definition provided here. Professor Smith and Professor Jones are going to produce a new introductory textbook. As true scientists, they have laid out the production function for the book as 9=81/271/2 where the number of pages in the finished book, S = the number of working hours spent by Smith, and the number of hours spent working by Jones. Smith values his labor as $3 per working hour. He has spent 900 hours preparing the first draft. Jones, whose labor is valued at $12 per working hour, will revise Smith's draft to complete the book.

a. How many hours will Jones have to spend to produce a finished book of 150 pages? Of 300 pages? Of 450 pages?

b. What is the marginal cost of the 150th page of the finished book? Of the 300th page? Of the 450th page?