What are economies of scope?
A)the cost of producing two products jointly by one firm is more than the cost of producing them separately
B)the cost of producing two products jointly by one firm is lesser than the cost of producing them separately
C)the cost of producing two products jointly by one firm is equal to the cost of producing them separately
D)none of the above

Question

​What are economies of scope?
A)​the cost of producing two products jointly by one firm is more than the cost of producing them separately
B)the cost of producing two products jointly by one firm is lesser than the cost of producing them separately
C)the cost of producing two products jointly by one firm is equal to the cost of producing them separately
D)​none of the above

Quizplus · Accepted Answer

Economies of scope refer to the cost advantages a firm experiences when it produces multiple products or services. Specifically, the cost of producing two products jointly by one firm is lower than the cost of producing them separately, which is why option B is correct. This allows the firm to spread out fixed costs over a larger variety of products and achieve economies of scale. Thus, a firm that produces several products benefits from economies of scope.

​What Are Economies of Scope

What Are Economies of Scope