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Suppose a firm has the ability to produce​ soap, toothpaste, or both. If the firm produces q Subscript Upper S units of soap and no​ toothpaste, then the total cost of production will be ​$33 thousand. If instead the firm produces q Subscript Upper T units of toothpaste and no​ soap, then the total cost of production will be ​$15 thousand.​ However, if the firm produces both q Subscript Upper S units of soap and q Subscript Upper T units of​ toothpaste, then the​ firm's total cost of production will be ​$46 thousand. Does this firm potentially experience economies of​ scope, diseconomies of​ scope, or no economies of​ scope?

Respuesta :

Answer:

Firm is facing diseconomies of​ scope

Degree of diseconomies of scope =  0.04347

Explanation:

given data

qS total cost of production = ​$33000

qT total cost of production = ​$15000

qS + qT total cost of production = ​$46000

solution

Firm is facing diseconomies of​ scope because here

Degree of diseconomies of scope will be

Degree of diseconomies of scope = [tex]\frac{qS + qS -  ( qS + qT )}{( qS + qT )}[/tex]      .......................1

put here value we get

Degree of diseconomies of scope = [tex]\frac{33000 + 15000 -(46000)}{(46000)}[/tex]

Degree of diseconomies of scope =  0.04347

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