Consider two industries: luxury handbag manufacturing and video game production. Assume that a typical luxury handbag manufacturer has fixed costs of $1 million for a new handbag design. Labor and materials costs are $500 per handbag. A typical video game company spends $100 million to develop and promote a new video game, but the cost to serve each additional customer is effectively zero, as the software is distributed over the internet. Calculate the total unit cost for handbags and video games at the following production volumes: 1,000; 100,000; 10,000,000. Which industry has the greater economies of scale? [Note: the total unit cost is the fixed cost plus the total variable cost divided by the unit volume: c = (FC +TVC)/n, where n is the production volume, FC is the fixed cost and TVC is the total variable cost. TVC=VC*n, where VC is the unit variable cost. Calculate economies of scale by the percentage reduction in unit cost for a 100-fold increase in unit volume.]