Economies of scale and economies of scope are related and occur for the same reason.

Question

Quizplus · Accepted Answer

Economies of scale refer to cost advantages that enterprises obtain due to size, output, or scale of operation, with costs per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output. Economies of scope, however, refer to cost advantages that a business obtains through the variety of products it offers, stemming from the ability to share or utilize the same operations, knowledge, or processes to produce different types of goods or services, rather than just producing more of a single product. While both can lead to cost savings, they occur for different reasons related to the scale and variety of production, respectively.

Economies of Scale and Economies of Scope Are Related and Occur