Diseconomies of scope occur when:
A) a firm's input prices rise as it increases output.
B) a firm's average cost of production rises as it increases production.
C) producing two products in a single firm is more expensive than producing them in separate firms.
D) a firm's average cost of production falls as it increases production.

Question

Quizplus · Accepted Answer

Diseconomies of scope refer to the situation where producing two or more products in a single firm is more expensive than producing them separately in different firms. This can occur due to a variety of reasons such as the need for different equipment or skills, increased complexity and coordination costs, and the inability to achieve economies of scale in each product line.

Diseconomies of Scope Occur When