What contributes to the existence of multiproduct firms?
A) Economies of scale
B) Economies of scope
C) Cost complementarity
D) Economies of scope and cost complementarity

Question

Quizplus · Accepted Answer

Multiproduct firms exist because of the combination of economies of scope and cost complementarity. Economies of scope refer to the cost savings that a firm can achieve by producing multiple products together, while cost complementarity refers to the cost savings that a firm can achieve by producing complementary products together. Together, these concepts create an incentive for firms to produce multiple products, as it allows them to reduce their costs and increase their profitability. Additionally, the ability to produce multiple products can also be a competitive advantage, as it allows firms to offer a wider range of products and services to customers.

What Contributes to the Existence of Multiproduct Firms