If a Firm Experiences Economies of Scope

question 13

Multiple Choice

If a firm experiences economies of scope,

• A)its average cost falls as it increases output
• B)its average cost rises as it increases output
• C)average production costs fall when it produces more than one kind of product
• D)it should integrate vertically
• E)average production costs rise as it produces more kinds of products

---

Definitions:

Defensive Attribution

Defensive attribution is a psychological process in which individuals attribute causes for events in a way that defends their self-esteem or minimizes their feelings of vulnerability.

Self-Serving Bias

A common tendency for individuals to attribute their successes to personal characteristics and their failures to external factors.

Self-Effacing Bias

The tendency to downplay one's own success or attribute positive outcomes to external factors rather than to one's own efforts or abilities.

Rationalization Attribution

The process of explaining an individual's behavior with logical, but not always true, reasons to justify actions or opinions.