Which of the Following Expressions Describes Economies of Scope

question 44

Multiple Choice

Which of the following expressions describes economies of scope?

• A)AC_A+B│X₁,X₂│ < AC_A│X₁,0│ + AC_B│X₂,0│
• B)AC_A+B│X₁,X₂│ > AC_A│X₁,0│ + AC_B│X₂,0│
• C)AC_A+B│X₁,X₁│ < AC_A│X₁,0│ + AC_B│X₁,0│
• D)AC_A+B│X₁,X₂│ = AC_A│X₁,0│ + AC_B│X₂,0│

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Definitions:

Industry-wide Price

The average or standard price level for goods and services across a specific industry or market.

Total Profit

The total earnings of a business after subtracting all costs, including both fixed and variable costs, from total revenue.

Average Total Cost

The total cost of production divided by the total quantity produced, including both fixed and variable costs.

Average Variable Cost

The total variable costs (costs that change with the level of output) divided by the quantity of output produced.