A firm produces Planes and Boats using the same machines and workers. The multi product total...

A firm produces Planes and Boats using the same machines and workers. The multi product total cost of producing Planes units H and Boats units S is given by

TC = xH + yS - zHS

where x, y, and z are positive.

What is the marginal cost of Planes? Boats?
Does this multi-product cost equation exhibit economies or diseconomies of scale? How about economies or diseconomies of scope?

Expert Solution

Rahul Sunny answered 2 years ago

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