Which of the following cost functions exhibits cost complementarity?
A. -4Q1Q2 + 8Q1
B. -4Q2 + 8Q1
C. 6Q1Q2 - Q1
D. 4Q2Q1 + 8Q1
A. -4Q1Q2 + 8Q1
answer is c
To determine which of the cost functions exhibits cost complementarity, we need to understand what cost complementarity means. In economics, cost complementarity refers to a situation where the cost of producing one good depends on the quantity of another good being produced.
If we look at the cost functions, we can identify the terms that represent the quantity of goods Q1 and Q2.
A. -4Q1Q2 + 8Q1
B. -4Q2 + 8Q1
C. 6Q1Q2 - Q1
D. 4Q2Q1 + 8Q1
Comparing the terms involving Q1 and Q2, we find that option C and option D have terms with both Q1 and Q2.
C. 6Q1Q2 - Q1
D. 4Q2Q1 + 8Q1
Thus, the answer is C. The cost function 6Q1Q2 - Q1 exhibits cost complementarity.