A multiproduct firm's cost function was recently estimated as:

C(Q₁,Q₂) = 90 - 0.5Q₁Q₂+0.4Q₁²+ 0.3Q₂²

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

multiple choice 1

• You cannot determine if there are economies of scope.
• Yes - there are economies of scope.
• No - there are no economies of scope.

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

multiple choice 2

• No - there are no cost complementarities.
• You cannot determine if there are cost complementarities.
• Yes - there are cost complementarities.

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?

multiple choice 3

• Marginal cost would decrease.
• Marginal cost would increase.
• Marginal cost would not change