A tire manufacturer decides to expand into the production of rubber roofing and as a result finds that its per unit production costs for tires falls.This is an example of economies of scope.

Question

Quizplus · Accepted Answer

Economies of scope refer to the cost savings that a company can achieve by producing multiple products together. In this case, the tire manufacturer is able to lower production costs for tires by expanding into rubber roofing, indicating the presence of economies of scope.

A Tire Manufacturer Decides to Expand into the Production of Rubber