Statistics Solutions

[See Solution] A multiproduct firm's cost function was recently estimated as C(Q_1, Q_2)=75-0.25 Q_1 Q_2+0.1 Q_1^2+0.2 Q_2^2 Are there economies of scope

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

\[C\left(Q_{1}, Q_{2}\right)=75-0.25 Q_{1} Q_{2}+0.1 Q_{1}^{2}+0.2 Q_{2}^{2}\]
  1. Are there economies of scope in producing 10 units of product 1 and 10 units of product 2?
  2. Are there cost complementarities in producing products 1 and 2 ?
  3. 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?

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