MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Question
Chapter 5, Problem 7CACQ
a)
To determine
To find:The economies of scope.
b)
To determine
To find:The cost complementarities.
c)
To determine
To find:The change in marginal cost of producing product .
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Students have asked these similar questions
A multiproduct firm’s cost function was recently estimated as
C( Q1,Q2 ) = 90 − 0.5 Q1 Q2 + 0.4Q21+ 0.3Q22
a. Are there economies of scope in producing 10 units of product 1 and 10 units of product 2? b. Are there cost complementarities in producing products 1 and 2? 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?
Sergio Lopez is a publisher of Latin American poetry. His fixed cost is $525, and the cost to produce each individual copy of his book is $3.50. Currently, Sergio is selling these books for $6 each. So far this year, he has produced x
a. Write a linear cost function C for Sergio’s book production, in terms of x.
b. Find the linear revenue function R for selling x copies of the book. Remember that P(x) = (price)x.
c. Use and 1b. to determine the profit function P for selling x books. Write the formula in simplified form.
d.Use your answer for 1c to determine the profit, in dollars, for selling 300 books.
4. A multiproduct firm's cost function was recently estimated as
C(Q₁, Q₂) = 75 -0.25010₂ +0.10+ 0.20²
a. Are there economies of scope in producing 10 units of product 1 and 10 units of product
2?
Are there cost complementarities in producing products 1 and 2?
Suppose that the division selling product 2 is in financial difficulties and that another
company has made an offer to buy the exclusive rights to produce product 2. How would
the sale of the rights to produce 2 change the firm's marginal cost of producing product
1?
b.
c.
Chapter 5 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
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