Jupiter LLC is a manufacturer of leather items. The board of directors of Jupiter realized that it is better to produce handbags and shoes together rather than in two separate factories. This way, the company can reduce its production costs. This scenario best illustrates a(n)_________.

Question

Quizplus · Accepted Answer

The scenario illustrates economy of scope, which is achieved when a company produces multiple products together in order to reduce production costs. This is different from economy of scale, which is achieved when a company produces a single product in large quantities to reduce production costs. The scenario does not necessarily demonstrate related-linked or unrelated diversification.

Jupiter LLC Is a Manufacturer of Leather Items