Which of the following is an example of economies of scope?
A) Declining average fixed costs due to increasing levels of capacity utilization
B) A single computer center supports multiple business units
C) Amortization of capitalized software
D) The divestiture of a product line
E) Shifting production from an underutilized facility to another to achieve a higher overall operating rate and shutting down the first facility

Question

Quizplus · Accepted Answer

Economies of scope occur when multiple products or services can be produced or delivered using a shared set of resources, resulting in lower costs per unit. Option B is an example of economies of scope as a single computer center can support multiple business units, thereby reducing the need for each unit to have its own computer infrastructure, resulting in cost savings. Options A, C, D, and E are not examples of economies of scope. Option A refers to economies of scale, Option C refers to the capitalization of expenses, Option D refers to divestiture, and Option E refers to shifting production to achieve higher utilization rates.

Which of the Following Is an Example of Economies of Scope