Operating synergy consists of economies of scale and scope. Economies of scale refer to the spreading of variable costs over increasing production levels, while economies of scope refer to the use of a specific asset to produce multiple related products or services.

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Economies of scale refer to the spreading of fixed costs over increasing production levels, not variable costs. Economies of scope involve using a specific asset to produce multiple related products or services.

Operating Synergy Consists of Economies of Scale and Scope