Let c(y1, y2) = y1 + y2 + (y1y2)^ −(1/3). Does this cost function have economies...

Let c(y1, y2) = y1 + y2 + (y1y2)^ −(1/3). Does this cost function have economies of scale for y1? What about economies of scope for any strictly positive y1 and y2. Hint, economies of scope exist if for a positive set of y1 and y2, c(y1, y2) < c(y1, 0) + c(0, y2). [Hint: Be very careful to handle the case of y2 = 0 separately.]

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Let c(y1, y2) = y1 + y2 + (y1y2) − 1 3 Does this cost function have economies of scale for y1? What about economies of scope for any strictly positive y1 and y2. Hint, economies of scope exist if for a positive set of y1 and y2, c(y1, y2) < c(y1, 0) + c(0, y2).

Rahul Sunny answered 1 month ago

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