1. U.S. and Canadian bricks-and-mortar retailing is increasingly becoming dominated by "hypermarts," enormous stores that sell groceries, household goods, hardware and other products under one roof. What are the possible economies of scale that might be enjoyed by "hypermarts?"

a) What are the potential diseconomies of scale?

b) How can "hypermarts" fend off competition from Web-based retailing?

2. A firm produces two products: and . The production technology displays the following costs, where (,) represents the cost of producing units of and units of :

(0,50) = 100, (5,0) = 150

(0,100) = 210, (10,0) = 320

(5,50) = 240, (10,100) = 500

Does this production technology display economies of scale? Of scope?