Author Question: The equation below gives the degree of economies of scope (SC): SC = (C(Q1 ) + C(Q2 ) - C(Q1,Q2 ... (Read 91 times)

SAVANNAHHOOPER23 · **on:** Jul 1, 2018

The equation below gives the degree of economies of scope (SC):

SC = (C(Q1 ) + C(Q2 ) - C(Q1,Q2 )) / C(Q1,Q2 )
where C(Q1 ) is the cost of producing output Q1, C(Q2 ) is the cost of producing output Q2, and C(Q1,Q2 ) is the joint cost of producing both outputs. If SC is negative:
A) there are neither economies nor diseconomies of scope.
B) there are economies of scope.
C) there are diseconomies of scope.
D) there are both economies and diseconomies of scope.

Question 2

Nervous Norman holds 70 of his assets in cash, earning 0, and 30 of his assets in an insured savings account, earning 2. The expected return on his portfolio

A) is 0.
B) is 0.6
C) is 1.
D) is 2.
E) cannot be determined without knowing what the dollar value of his assets is.