Economies of scope are said to exist when
A)one firm produces many products rather than separate firms for each.
B)many firms produce many products rather than one firm producing all.
C)many firms produce a single product rather than one firm.
D)one firm can produce multiple products at a lower cost than separate firms producing each.

Question

Quizplus · Accepted Answer

Economies of scope refer to cost savings that arise when a firm produces multiple products or services using the same resources and capabilities. In other words, the firm can produce a range of products at a lower cost than separate firms producing each product individually. Therefore, option D is the correct answer.

Economies of Scope Are Said to Exist When