Which of the following best describes economies of scope?
A)The average cost declines as output increases
B)The average cost increases as output increases
C)The average cost remains constant as output increases
D)Savings are achieved when a firm produces a wider variety of goods
E)Savings are achieved when a firm produces a decreased variety of goods

Question

Quizplus · Accepted Answer

Economies of scope refer to the cost savings that a firm can achieve by producing a wider variety of goods. Producing multiple goods allows the firm to share resources, such as equipment and labor, among different product lines, thereby lowering costs.

Which of the Following Best Describes Economies of Scope