economics 159

Suppose a firm has the production technology shown below for Goods 1 and Goods 2 and respond to the following with an explanation for answer.

    Good 1                                   Good 2                                                   Both

Q1         Cost                            Q1      Cost                                 Q1                Q2        Cost

10           50                             10        60                                   10                 10          100

20          100                            20        100                                  20                 20         180

30          150                            30        130                                  30                 30         250

 

1.  Does Good 1 indicate economies of scale?  Why or why not?

2. Does Good 2 indicate economies of scale?  Why or why not?

3. Do the two goods indicate economies of scope?  Why or why not?

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