Consider a firm that produces ships and submarines. This firm's production transformation curves for two different input levels are illustrated in the figure to the right. In particular, the firm is using twice as many inputs at O₂ compared to 0₁. This firm experiences Furthermore, the firm experiences scale in the production of ships and scale in the production of submarines. Number of submarines 100- 90- 80- 70- 60- 50- 40- 30- 20 10- 10 20 0₁ 30 40 50 60 70 Number of ships 80 90

Consider a firm that produces ships and submarines. This firm's production transformation curves for two different input levels are illustrated in the figure to the right. In particular, the firm is using twice as many inputs at O₂ compared to 0₁. This firm experiences Furthermore, the firm experiences scale in the production of ships and scale in the production of submarines. Number of submarines 100- 90- 80- 70- 60- 50- 40- 30- 20 10- 10 20 0₁ 30 40 50 60 70 Number of ships 80 90

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Part one: a. no economies of scope b. diseconomies of scope or c. economies of scope Part two and three a. no economies b. economies or c. diseconomies

Consider a firm that produces ships and submarines.
This firm's production transformation curves for two
different input levels are illustrated in the figure to the
right. In particular, the firm is using twice as many
inputs at O₂ compared to 0₁.
This firm experiences
Furthermore, the firm experiences
scale in the production of ships and
scale in the production of submarines.
Number of submarines
100-
90-
80-
70-
60-
8 999
50-
40-
30-
20
10-
0
0
10 20
O
0₂
30 40 50 60 70 80 90
Number of ships

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