Economies of Scope

question 22

Multiple Choice

Economies of scope

• A)are cost reductions that flow from operating in multiple related businesses.
• B)arise only from strategic fit relationships in the production portions of the value chains of sister businesses.
• C)are more associated with unrelated diversification than related diversification.
• D)are present whenever diversification satisfies the attractiveness test and the cost of entry test.
• E)arise mainly from strategic fit relationships in the distribution portions of the value chains of unrelated businesses.

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Definitions:

Quantity of Capital

The total volume of physical assets, such as machinery and buildings, used in the production of goods and services.

Output Per Worker

The quantity of goods or services produced divided by the number of workers, indicating the productivity level of labor within an economy.

Technology Level

The current state of technological advancement or development within a society or sector.

Per-worker Production Functions

Per-worker production functions describe the relationship between inputs used per worker (like capital per worker) and the output produced per worker, illustrating productivity.