Economies of scope
20 نوفمبر 2021 2021-11-15 1:37Economies of scope
Give an example of economies of scope
Economies of scope is an economic theory stating that average total cost of production decrease as a result of increasing the number of different goods produced. For example, a gas station that sells gasoline can sell soda, milk, baked goods
Example :companyABC is the leading desktop computer producer in the industry.
Company ABCwants to increase its priduct line.
An economy of scope means that the production of one good reduces the cost of producing another related good. Economies of scope occur when producing a wider variety of goods or services in tandem is more cost effective for a firm than producing less of a variety, or producing each good independently. In such a case, the long-run average and marginal cost of a company, organization, or economy decreases due to the production of complementary goods and services.
economy of scope provides cost savings to businesses with a diversified product line. It allows for greater output with a relatively small increase in fixed costs.
Ex: a website that is used to sell several products from different firms.
Economies of scope means makingand producing many goods or services by using the same process and this increases efficiency and example for that is that any website can choose to sell one or many items in the same time.
