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Suppose a firm’s multiproduct cost function is C(Q1, Q2) = 65 - 0.5Q1Q2 + 0.3Q12 + 0.4Q22,...

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Economics

  1. Suppose a firm’s multiproduct cost function is C(Q1,Q2) = 65 - 0.5Q1Q2 +0.3Q12 + 0.4Q22, andmanagement wishes to produce 12 units of each product(Q1 = Q2 = 12 units).
  1. Determine the marginal cost of each product at the plannedlevels of production. Clearly show your steps andcalculations.

  1. Determine whether the multiproduct cost function exhibitseconomies of scope or not at the planned levels of production.Clearly show your steps and calculations.

  1. Determine whether the multiproduct cost function exhibits costcomplementarity or not at the planned levels of production. Clearlyshow your steps and calculations.
  1. Discuss the economic implications of the outcomes in (b) and(c) above.

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