If a firm can lower production costs by sharing a resource among one or more of its products, it benefits from ________.
A) economies of scope
B) learning curve effects
C) minimum efficient scales
D) economies of scale

Question

Quizplus · Accepted Answer

Economies of scope refers to the cost savings a firm can achieve by sharing resources among multiple products or business units. This enables the firm to spread its costs over a larger volume of output, reducing the average cost of production. Therefore, if a firm can lower production costs by sharing a resource among one or more of its products, it benefits from economies of scope. Learning curve effects and minimum efficient scales may also result in cost savings, but they are not specifically related to sharing resources among multiple products. Economies of scale also involve cost savings due to increased production volume, but not necessarily through resource sharing.

If a Firm Can Lower Production Costs by Sharing a Resource