When there are economies of scope between two products which are separately produced by two firms,merging into a single firm can:
A) accomplish an increase in sales.
B) accomplish a reduction in costs.
C) lead to an increase in cost.
D) lead to a reduction in sales.

Question

Quizplus · Accepted Answer

When there are economies of scope between two products, merging into a single firm can lead to a reduction in costs. This is because there are cost savings associated with sharing resources, technologies, and knowledge across the production of two products. As a result, the merged firm can achieve greater cost efficiency, which can increase its overall profitability.

When There Are Economies of Scope Between Two Products Which