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Two firms currently produce the goods q1 and q2 separately. Their cost functions are C(q1) = 25+ q1, and C(q2) = 35+ q2. By merging, they can produce the two goods jointly with costs described by the function C(q1, q2) = 45 + q1 + q2. Are there scope economies in this case that would justify the merger?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M970265

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