The merger between two general merchandise stores, Sears and Kmart, each of which carried some specialty items, most likely produced:
A) neither economies of scope nor economies of scale.
B) both economies of scope and economies of scale.
C) economies of scope but not economies of scale.
D) economies of scale but not economies of scope.

Question

Quizplus · Accepted Answer

The merger likely produced both economies of scope and economies of scale. Economies of scale occur as the combined entity can reduce costs per unit through increased production levels. Economies of scope arise as the merged stores can offer a wider range of products more efficiently than they could separately.

The Merger Between Two General Merchandise Stores, Sears and Kmart