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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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