What are economies of scope?
A)lower average costs when multiple different products are produced
B)higher average costs when multiple different products are produced
C)Constant average costs when multiple different products are produced
D)none of the above

Question

​What are economies of scope?
A)​lower average costs when multiple different products are produced
B)higher average costs when multiple different products are produced
C)Constant average costs when multiple different products are produced
D)​none of the above

Quizplus · Accepted Answer

Economies of scope refer to the cost advantages that a firm can enjoy by producing multiple products at once. This allows the firm to spread its fixed costs over a larger output and reduces the average cost of production. As a result, the firm can produce a variety of products more efficiently and at a lower cost than if it were producing each product separately. Therefore, choice A is the correct answer.

​What Are Economies of Scope

What Are Economies of Scope