Exploring Macroeconomics
Exploring Macroeconomics
8th Edition
ISBN: 9781544337722
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Chapter 2, Problem 14P
To determine

The benefits of specialization to Fran and which good she would specialize in.

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Conner runs two kinds of rafting trips. If he spends all day on a wild whitewater rafting, he can do 3 trips, or he can do 4 trips of a mellow wildlife rafting. If he does some of each, however, he can do more total trips: 2 whitewater trips and 3 wildlife trips. Conner’s time is valued at $20/hour. Finding the value for the economies of scope of Conner’s rafting experience. What can you say about his economies of scope? i.e., does Conner reduce the average cost by making some of each trip or by making each trip separately?  Show your work.
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