7. A multiproduct firm’s cost function was recently estimated as

a. Are there economies of scope in producing 10 units of product 1 and 10 units of product 2?

b. Are there cost complementarities in producing products 1 and 2?

c. Suppose the division selling product 2 is floundering and another company has made an offer to buy the exclusive rights to produce product 2. How would the sale of the rights to produce product 2 change the firm’s marginal cost of producing product 1?

Transcribed Image Text:

C(Q, Q)=75-0.25QQ+ 0.10 +0.20%2