Production with Two Outputs Economies of Scope

Many firms produce more than one product. Sometimes a firm's products are closely linked to one another-a chicken farm produces poultry and eggs, an automobile company produces automobiles and trucks, and a university produces teaching and research. Other times,firms produce products that are physically unrelated. In both cases, however, a firm is likely to enjoy production or cost advantages when it produces two or more products. These advantages could result from the joint use of inputs or...