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  3. 2. a firm has a demand and cost function given by:

2. A firm has a demand and cost function given by: D: P=100-Q, C: P=10+2q1+4q2 a) Demonstrate...

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Economics

2. A firm has a demand and cost function given by: D: P=100-Q,C: P=10+2q1+4q2

a) Demonstrate whether this firm has economies to scale.

b) Demonstrate whether this firm has economies of scope.

c) Assume that the firm is the only firm in the market, derivegraphically and numerically the optimal quantity, price and theprofits/losses.

d) What is the Lerner Index? Provide a numerical value andexplain the relevance of the index/how it is used

Answer & Explanation Solved by verified expert
3.9 Ratings (462 Votes)
A economies of scale is cost advantage due to increase inscale Average cost decreases when scale or productionIncreasesC102Q14Q2AC10Q124Q2Q1DERIVATIVE of AC with respect to Q1ACQ110Q124Q2q12104Q2Q12So negitive DERIVATIVE shows    See Answer
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