The text claims that economies of scope must be supported by potential transaction cost savings:
A)This is true. The firm itself must be able to save on transaction costs
B)This is true - however, the saving could be on behalf of the firms' customers. This would work too.
C)This is not quite true. Transaction cost savings are nice to have, but not necessary
D)This is untrue. The text is mistaken.

Question

Quizplus · Accepted Answer

The text states that economies of scope must be supported by potential transaction cost savings. This does not necessarily mean that the firm itself must save on transaction costs, as the savings could also benefit the customers. Therefore, option B is the most accurate choice.

The Text Claims That Economies of Scope Must Be Supported