Economies of Scope Occur When

question 157

Multiple Choice

Economies of scope occur when

• A)two firms producing different products merge and average total cost declines.
• B)a firm increases output and long-run average total cost declines.
• C)an increase in capital shifts the short-run average total cost curve down.
• D)one firm spins off and average total cost declines.
• E)average total cost increases along with firm expansion.

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Definitions:

Dollar General

A chain of variety stores in the United States known for selling items at low costs, often in rural and suburban areas.

Discount Stores

Retail outlets that sell products at prices lower than those asked by traditional retail stores, often through selling in bulk or reducing overhead costs.

Low-Cost

A pricing strategy or characteristic indicating that something is relatively inexpensive or cheaper than alternatives.

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.