Diseconomies of scope occur when
A) A firm's input prices rise as it increases output
B) A firm's average cost of production rises as it increases production
C) Producing two products in a single firm is more expensive than producing them in separate firms
D) A firm's average cost of production falls as it increases production

Question

Quizplus · Accepted Answer

Diseconomies of scope refer to the increase in average cost of production as a firm expands its range of activities. This is opposite to economies of scope where the average cost of production decreases as a firm expands its range of activities. Option A refers to input price rise which is not directly related to scope, option C is reversing the concept of economies of scope, and option D refers to economies of scale.

Diseconomies of Scope Occur When