Which of the following best describes economies of scope?
A)They occur when the average cost of production decreases as the level of output increases.
B)They are effects on costs related to managerial ability and other hard-to-quantify factors.
C)They occur when cost savings are realized from using many of the same inputs to produce multiple products.
D)They occur when the average cost of production increases as the level of output increases.
E)They occur when cost increases are realized from using many of the same inputs to produce multiple products.

Question

Quizplus · Accepted Answer

Economies of scope occur when cost savings are realized from using many of the same inputs to produce multiple products. This means that by producing multiple products, a company can lower the average cost of production for each individual product. This is different from economies of scale, which occur when the average cost of production decreases as the level of output increases.

Which of the Following Best Describes Economies of Scope