Which of the following is an example of the economies of scope argument for increased profits for large financial holding companies?
A) Financial holding companies offer a wide array of services under one name.
B) Financial holding companies need only one CEO, one Board of Directors, and one accounting system regardless of size.
C) Financial holding companies face declining average costs per dollar of deposits.
D) The profitability of financial holding companies relies on one particular line of business.

Question

Quizplus · Accepted Answer

Economies of scope suggest that producing a larger variety of services under one name will reduce the cost per unit of production and increase profits. Therefore, financial holding companies offering a wide array of services under one name is an example of economies of scope. The other options are not related to the concept of economies of scope.

Which of the Following Is an Example of the Economies