eost in a multiproduet firm23 Ralph is toying with eoncepts of eost. A two produet finn, with quantities denoted q1 and

e1( q1,

e2(q1'qz) = 6q1 + qi + 8qz + ef; and e3(ql'qz) = 7q1 + 9qz + qlqz.

output total average average

(qu

(100,50)

(60,50)

(40,50)

(30,10)

(30,50)

(30,70)

23Conlribuled by Rick Anile.

ineremeotal ioeremeotal eo st ofql eost of b] Write a brief paragraph about your observations on this exereise.
e] In addition, Ralph instruets you to write a brief paragraph on eaeh of the following two questions: (i) what is the eeonomic signifieance of nonlinearities in the eost funetions; and (ii) what is the eeonomie signifieanee of interaetions in a eost funetion (e.g., the ql'h term in C3)?AppendixLO1