It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries.If Firm A merges with firm B,it can produce both the five radios and the five batteries for $1000.The firm has experienced
A)Economies of Scale
B)Economies of Scope
C)Diseconomies of Scale
D)Diseconomies of Scope

Question

​It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries.If Firm A merges with firm B,it can produce both the five radios and the five batteries for $1000.The firm has experienced
A)​Economies of Scale
B)Economies of Scope
C)Diseconomies of Scale
D)​Diseconomies of Scope

Quizplus · Accepted Answer

The merger of firm A and firm B leads to economies of scope since the two firms can now produce two different products (radios and batteries) at a lower cost than producing them separately.

​It Costs Firm a $800 to Produce Five Radios and It

It Costs Firm a $800 to Produce Five Radios and It