Question
Suppose a firm has the ability to producesoap, toothpaste, or both. If the firm produces qS units of soap and notoothpaste, then the total cost
Suppose a firm has the ability to producesoap, toothpaste, or both. If the firm produces qS units of soap and notoothpaste, then the total cost of production will be $15 thousand. If instead the firm produces qT units of toothpaste and nosoap, then the total cost of production will be $13 thousand.However, if the firm produces both qS units of soap and qT units oftoothpaste, then thefirm's total cost of production will be $79 thousand.
Does this firm potentially experience economies ofscope, diseconomies ofscope, or no economies ofscope?
This firm potentially experiences diseconomies of scope
.
What is thefirm's degree of diseconomies ofscope?
The degree to which this firm potentially experiences diseconomies of scope is
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started