Economies of scope are realized when setup cost reductions allow more frequent setups and,thereby smaller lot sizes can be run.

Question

Quizplus · Accepted Answer

Economies of scope refer to the cost savings that result from producing multiple products or services through the shared utilization of resources. One aspect of economies of scope is setup cost reduction, which can enable more frequent setups and the ability to run smaller batch sizes. Therefore, the statement in the question is true.

Economies of Scope Are Realized When Setup Cost Reductions Allow