When Only a Few Firms Can Perform a Capability in the Same

question 15

Multiple Choice

When only a few firms can perform a capability in the same unique way this capability is considered to be:

• A) Valuable
• B) Costly to imitate
• C) Rare
• D) Non-substitutable

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Definitions:

Economies of Scale

Economies of scale describe the reduction in per-unit cost that a company benefits from as it scales up production. This cost benefit is due to the fixed costs spreading over a larger number of units.

Economies of Scope

Cost advantages that enterprises obtain by producing a wide range of products, diversifying their output, and sharing production inputs.

Economies of Scope

Cost advantages that enterprises obtain due to the efficient production of a wide range of products rather than specializing in a single product or service.

Joint Cost Function

A concept in economics where certain costs are incurred to produce multiple products simultaneously, making it challenging to allocate the costs distinctly to each product.