Which of the following explain why cost reduction occurs in the context of scope economies?
A) high production volumes.
B) high production volumes and similarities in the resource requirements for different products.
C) high production volumes and the tendency of the firm to fully exploit its existing resources.
D) similarities in resource requirements for different products, as well as the tendency of the firm to fully exploit its existing resources.

Question

Quizplus · Accepted Answer

When a company has resources and capabilities that are not fully exploited through current products/services,it may diversify by introducing products that require similar resources with the aim of fully exploiting its resources.This is explained by scope economies choice d.While choice a explains scale economies,choices b and c are a combination of scale and scope economies.

Which of the Following Explain Why Cost Reduction Occurs in the Context