Identify a true statement about economies of scope.
A)They exist when costs are reduced by increasing the volume of a specific activity.
B)They exist when costs are reduced by expanding the scope of a company's operations to related activities.
C)They occur when a company decreases its output below the minimum efficient scale.
D)They occur when a company increases its output beyond the minimum efficient scale.

Question

Quizplus · Accepted Answer

Economies of scope occur when a company can reduce its costs by expanding its operations to related activities. This allows for the sharing of resources and expertise, leading to cost savings. Option A describes economies of scale, not economies of scope. Option C is incorrect because decreasing output below the minimum efficient scale would lead to higher average costs. Option D also describes economies of scale, not economies of scope.

Identify a True Statement About Economies of Scope