Skip to Main Content
Managerial Economics and Strategy, 2/e
book

Managerial Economics and Strategy, 2/e

by Jeffrey M. Perloff, James A. Brander
February 2016
Beginner to intermediate content levelBeginner to intermediate
500 pages
33h 40m
English
Pearson
Content preview from Managerial Economics and Strategy, 2/e

6.5 The Costs of Producing Multiple Goods

If a firm produces two or more goods, the cost of one good may depend on the output level of another. Outputs are linked if a single input is used to produce both of them. For example, cattle provide beef and hides (for leather), and petroleum supplies both heating fuel and gasoline. It is less expensive to produce beef and hides together than separately. If the goods are produced together, a single animal yields one unit of beef and one hide. If beef and hides are produced separately (throwing away the unused good), the same amount of output requires two animals and more labor.

A cost function exhibits economies of scope if it is less expensive to produce goods jointly than separately (Panzar and Willig, ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Managerial Economics

Managerial Economics

Donald N. Stengel
Managerial Economics

Managerial Economics

Vanita Agarwal
Principles of Managerial Finance, 15th Edition

Principles of Managerial Finance, 15th Edition

Scott B. Smart, Chad J. Zutter, Lawrence J. Gitman

Publisher Resources

ISBN: 9780134472553