Economies of scope

1. What is an example of economies of scope?
2. What is economies of scope vs scale?
3. Why are economies of scope important?
4. What are the types of scope of economics?

What is an example of economies of scope?

Economies of scope is an economic theory stating that average total cost of production decrease as a result of increasing the number of different goods produced. For example, a gas station that sells gasoline can sell soda, milk, baked goods, etc.

What is economies of scope vs scale?

Economy of scope and economy of scale are two different concepts used to help cut a company's costs. Economies of scope focuses on the average total cost of production of a variety of goods, whereas economies of scale focuses on the cost advantage that arises when there is a higher level of production of one good.

Why are economies of scope important?

The Importance of Economies of Scope

Economies of scope allow a company to gain efficiency from producing a larger variety of products. A company is able to sell a greater range of products and also respond to changes in consumer preferences. It reduces risks for a company by allowing for related diversification.

What are the types of scope of economics?

It may also be added that, the study of modern economics is divided into two parts, viz., microeconomics or price theory (concerned with the behaviour of an economic agent or unit such as an individual consumer or business firm) and macroeconomics (concerned with the study of certain broad aggregates, such as national ...