Chris raises cows and produces cheese and milk because he enjoys:
A) economies of scale.
B) economies of scope.
C) cost complementarity.
D) None of the preceding answers is correct.

Question

Quizplus · Accepted Answer

Chris enjoys economies of scope because he is able to produce multiple products (cheese and milk) using the same resources (cows) and potentially reduce his production costs. This is different from economies of scale, which refer to the cost advantages gained by increasing the scale of production of a single product. Cost complementarity refers to the way in which the cost of producing one product is reduced because of the production of another product, which is related to economies of scope. None of the answers accurately describe Chris's situation, except for B.

Chris Raises Cows and Produces Cheese and Milk Because He