Consider a firm selling two different products at two different plants. The cost function for both plants is given by C (q1, q2) = q12 + αq1q2 + q22.
a) What is the marginal cost of producing one more unity of good 1? Of good 2?
b) Write down the total profit function for a perfectly competitive firm selling these two goods.
c) What are the TWO first order conditions for this firm?
d) For what values of α does the firm face economies of scope?