The cost of producing 600 small fiberglass sailboats per year, and the cost of producing sails and fittings necessary to make the boats seaworthy in a single plant, are together $780,000. If produced in separate plants, the boats would cost $540,000, and the sails and fittings would cost $180,000. From this information.
a. Calculate the economies of scope in the production of sailboats, sails, and fittings?
b. What can you conclude from your solution (i.e. should they be produced together by one firm or separately by different firms? Why?