Question 2 Tembi's Fashion Boutique can jointly produce evening gowns and formal gowns. The joint cost curve is: CE,F (ql, q2) = 75 q1 + 125 q2 - 20 q1¹/2q2¹/2, where q1 is the number of evening gowns and q2 is the number of formal gowns Tembi produces. If Tembi produces evening gowns alone, the cost function is: CE (q1) = 75 q1. If Tembi produces formal gowns alone, the cost function is: CF (q2) = 125 q2. Calculate Tembi's degree of economies of scope if she produces 25 evening gowns and 9 formal gowns. Interpret your answer. Use the formula below. SC = CE(91)+CF(92) - CEF(91, 92) CEF(91, 92)
Question 2 Tembi's Fashion Boutique can jointly produce evening gowns and formal gowns. The joint cost curve is: CE,F (ql, q2) = 75 q1 + 125 q2 - 20 q1¹/2q2¹/2, where q1 is the number of evening gowns and q2 is the number of formal gowns Tembi produces. If Tembi produces evening gowns alone, the cost function is: CE (q1) = 75 q1. If Tembi produces formal gowns alone, the cost function is: CF (q2) = 125 q2. Calculate Tembi's degree of economies of scope if she produces 25 evening gowns and 9 formal gowns. Interpret your answer. Use the formula below. SC = CE(91)+CF(92) - CEF(91, 92) CEF(91, 92)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question 2
Tembi's Fashion Boutique can jointly produce evening gowns and formal gowns. The joint
cost curve is: CE,F ( q1, q2) = 75 q1 + 125 q2 - 20 q1¹/2q2¹/2, where q1 is the number of
evening gowns and q2 is the number of formal gowns Tembi produces. If Tembi produces
evening gowns alone, the cost function is: CE (91) = 75 q1. If Tembi produces formal
gowns alone, the cost function is: CF (q2) = 125 q2.
Calculate Tembi's degree of economies of scope if she produces 25 evening gowns and 9
formal gowns. Interpret your answer. Use the formula below.
SC=
CE(91)+CF(92) - CEF(91, 92)
CEF(91, 92)
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