Which of the following is true regarding the relationship between returns to scale and economies of scope?
A) A firm experiencing economies of scope must also experience increasing returns to scale.
B) Economies of scale and economies of scope must occur together.
C) A firm experiencing increasing returns to scale must also experience economies of scope.
D) There is no definite relationship between returns to scale and economies of scope.

Question

Quizplus · Accepted Answer

Returns to scale refer to changes in output resulting from a proportional change in all inputs in the production process, while economies of scope refer to cost advantages that a firm experiences by producing a variety of products rather than specializing in a single product. These concepts describe different phenomena and do not necessarily imply the presence of one another, indicating that there is no definite relationship between them.

Which of the Following Is True Regarding the Relationship Between