Asked by Katelyn Chapman on May 18, 2024
Verified
Company X produces more than one product at its manufacturing facility,which lowers the firm's overall production costs.This is most likely an example of ________.
A) economies of scale
B) economies of scope
C) market diversification
D) horizontal integration
Economies of Scope
Cost advantages that a business obtains due to a broader range of operations or production levels.
Horizontal Integration
A strategy where a company acquires or merges with other companies at the same stage of production in its industry, seeking to increase market share.
Market Diversification
The strategy of entering into new markets or creating new products to reduce reliance on a single market or product line.
- Understand the concept of economies of scale and economies of scope.
- Recognize how vertical and horizontal integration impact a firm's production costs and efficiency.
Verified Answer
EK
Edward KurowskiMay 20, 2024
Final Answer :
B
Explanation :
Economies of scope occur when a firm produces multiple products using the same resources, technology, and expertise. This can lead to lower production costs, as the fixed costs are spread over more units of output. In contrast, economies of scale refer to reducing production costs by increasing the volume of a single product. Market diversification and horizontal integration involve expanding a firm's operations into new products or markets, rather than reducing production costs.
Learning Objectives
- Understand the concept of economies of scale and economies of scope.
- Recognize how vertical and horizontal integration impact a firm's production costs and efficiency.