Homework Answers
They firm potentially experiences diseconomies of scope because the cost of producing both toothpaste and soap is higher than consuming both the products separately.
When only toothpaste is produced, the total cost is $14000.
When only soap is produced, the total cost is $21000.
When both toothpaste and soap is made together, the total cost is $91000.
The degree pf diseconomies of scale = (91000-21000-14000) / 91000
= 56000/91000
= 0.615
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