Which of the following best describes economies of scope?
A)They occur when the average cost of production decreases as the level of output increases.
B)They are effects on costs related to managerial ability and other hard-to-quantify factors.
C)They occur when cost savings are realized from using many of the same inputs to produce multiple products.
D)They occur when the average cost of production increases as the level of output increases.

Question

Quizplus · Accepted Answer

Economies of scope occur when cost savings are realized from using many of the same inputs to produce multiple products. This can happen when a company can leverage its resources and capabilities to produce multiple products, thereby spreading its fixed costs over a larger output volume. As a result, the average cost of production decreases, leading to economies of scope.

Which of the Following Best Describes Economies of Scope