Every release of the Apple iPhone occurs with great fanfare. Using the following

Question

Every release of the Apple iPhone occurs with great fanfare. Using the following cost function, answering the following questions for Apple: In the following cost function Q1 stands for computers and Q2 for iPhones C(Q1) = 100 + Q1 C(Q2) = 100 + 2Q2 C(Q1,Q2) = 100 + Q1 + 2Q2 a. do you have economies of scope? b. Do you have cost complementarities in producing computers and iPhones? c. If you are a stockholder of Apple, are you excited about the new release based on the information in this question?

Explanation / Answer

a) Yes, there are economies of scope b) Yes c) Yes I am because Apple is known for its outstanding products because of which I have invested in it and its products are known to sell very fast and in huge quantities (millions of pieces on the first day itself) which will probably give me some good profit depending on my shares.

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