Economies of scope exist in a firm when the value of the products or services it sells increase as a function of the number of businesses in which the firm operates.

Question

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Economies of scope occur when a company can produce goods or services at a lower cost by leveraging shared resources or jointly using their capabilities between various businesses. As a result, the value of the products or services sold can increase as the firm operates in multiple businesses simultaneously.

Economies of Scope Exist in a Firm When the Value