A firm has economies of scope when it can produce two products jointly at a total cost that is:
Correct answer: C. Lower than producing them separately
- A. Higher than producing them separately
- B. Equal to the cost of producing either product
- C. Lower than producing them separately
- D. Unaffected by the number of products
Explanation
Economies of scope occur when joint production is cheaper than separate production of the same quantities. They often result from sharing facilities, inputs, distribution networks or managerial resources.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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