8.33. A railroad provides passenger and freight service. The table shows the long-run total annual costs TC(F,
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8.33. A railroad provides passenger and freight service.
The table shows the long-run total annual costs TC(F, P), where P measures the volume of passenger traffic and F the volume of freight traffic. For example, TC(10,300) ! 1,000.
Determine whether there are economies of scope for a railroad producing F ! 10 and P ! 300. Briefly explain.
TC(Q1, Q2) ! e 0, if Q1 ! 0 and Q2 ! 0 1000 " 2Q1 " 3Q2, otherwise
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