Economies of scope occur when
A)two firms producing different products merge and average total cost declines.
B)a firm increases output and long-run average total cost declines.
C)an increase in capital shifts the short-run average total cost curve down.
D)one firm spins off and average total cost declines.
E)average total cost increases along with firm expansion.

Question

Quizplus · Accepted Answer

Economies of scope occur when two firms producing different products merge and average total cost declines. This is because the two products can share resources and their production processes can be streamlined, leading to cost savings.

Economies of Scope Occur When