Asked by Spencer Hamer- on Jul 14, 2024
Verified
It costs firm A $800 to produce five radios and it costs firm B $500 to produce five batteries.If Firm A merges with firm B,it can produce both the five radios and the five batteries for $1000.The firm has experienced
A) Economies of Scale
B) Economies of Scope
C) Diseconomies of Scale
D) Diseconomies of Scope
Economies Of Scope
cost advantages that enterprises obtain due to the efficient allocation and utilization of resources across multiple products or services.
- Understand the concept of economies and diseconomies of scope.
Verified Answer
CA
Claire AlvarezJul 16, 2024
Final Answer :
B
Explanation :
The merger of firm A and firm B leads to economies of scope since the two firms can now produce two different products (radios and batteries) at a lower cost than producing them separately.
Learning Objectives
- Understand the concept of economies and diseconomies of scope.