Economics • Economic BasicsMedium
Which of the following describes 'Economies of Scope'?
A. Cost advantages that a firm obtains due to expansion of scale in producing a single product
B. Cost savings achieved when a single firm produces multiple different products rather than separate firms producing each independently✓ Correct Answer
C. Reductions in long-run average costs resulting from industry-wide growth
D. Efficiency gains realized through international labor outsourcing
💡 Solution & Explanation
Economies of scope arise when a single corporate entity reduces its average production costs by manufacturing a diverse variety of products together rather than having separate enterprises produce them independently. This efficiency stems from shared inputs, distribution networks, or technological platforms. Scale-related cost reductions for a single product line pertain instead to economies of scale rather than scope.
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