What Is the Difference Between Economies of Scale and Economies

question 37

Multiple Choice

What is the difference between economies of scale and economies of scope?

• A)Scale refers to the magnitude or size of the operation, while scope refers to the reach of defined savings within the value chain.
• B)Scale refers to the extent of change, while scope refers to the possibilities of change.
• C)Scale is about dimensions, while scope is about the capacity available for production capabilities.
• D)Scale refers to cost savings that accrue directly from larger-sized operations, while scope stems directly from strategic fit along the value chains of related businesses.
• E)Scale and scope mean the same thing and the only difference is the extent of cost savings accrued from unrelated businesses in each.

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Definitions:

Passed Through

A term often used in finance and taxation to describe income, losses, or tax benefits transferred from one entity to another, such as in a pass-through entity.

Limited Liability Company

A business configuration that combines the beneficial limited liability of a corporation with the pass-through taxation system of partnerships or sole proprietorships.

Taxes

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Limited Liability Company

An organizational form blending a corporation's limited liability feature with the pass-through tax benefits of a partnership or sole proprietorship.