When the value of the products or services a firm sells increases as a function of the number of business that the firm operates in, ________ are said to exist.
A) economies of scope
B) vertical economies
C) economies of scale
D) diseconomies of scope

Question

Quizplus · Accepted Answer

Economies of scope refer to the cost advantages that a firm can achieve by operating in multiple businesses or markets, allowing it to share resources and leverage its expertise across product lines. As a result, the value of the products or services offered by the firm can increase as it expands its scope of operations. Vertical economies (B) refer to cost advantages that come from controlling different stages of the supply chain, while economies of scale (C) refer to cost advantages that come from producing larger volumes of output. Diseconomies of scope (D) occur when expanding into new markets or product lines increases costs rather than reducing them.

When the Value of the Products or Services a Firm