Economies of scope:
A)are related to the average cost of producing a good when you double the scale of output.
B)are higher the more specialized a firm is in production.
C)means the rotation of the long-run total cost curve in a downward direction.
D)are a production characteristic in which the total cost of producing given quantities of two goods in the same firm is less than the total cost of producing those quantities in two single-product firms.

Question

Quizplus · Accepted Answer

Economies of scope refer to the cost advantages a company obtains when it produces two or more products together rather than separately. Therefore, choice D is correct. Choices A, B, and C are not correct because they do not accurately describe economies of scope. Economies of scope refer to the cost reductions that occur when a single firm produces multiple products or services. It occurs when the total cost of producing given quantities of two goods in the same firm is less than the total cost of producing those quantities in two single-product firms.

Economies of Scope