The Only Two Economies of Scope That Do Not Have

question 76

True/False

The only two economies of scope that do not have the potential for generating positive returns for a firm's equity holders are diversification in order to maximize the size of a firm and diversification to reduce risk.

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Definitions:

Evolutionary Theory

The theory that explains the diversity of life on Earth through the processes of natural selection and genetic mutation over time.

Social Exchange Theory

The view of social relationships as involving an exchange of goods, the objective of which is to minimize costs and maximize benefits.

Mere Exposure Effect

A mental effect in which individuals grow fond of things simply due to their familiarity.

Social Identity Theory

A psychological theory that examines the influence of group membership on people's self-concept and behavior with others.