Economies of Scope Occur When

question 157

Multiple Choice

Economies of scope occur when

• A)two firms producing different products merge and average total cost declines.
• B)a firm increases output and long-run average total cost declines.
• C)an increase in capital shifts the short-run average total cost curve down.
• D)one firm spins off and average total cost declines.
• E)average total cost increases along with firm expansion.

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Definitions:

Stock Prices

The current market price at which a share of stock can be bought or sold.

Economic Value

Refers to the maximum amount a consumer is willing to pay for an item in contrast to its market price or the value of the benefits derived from owning the item.

Publicly Available Information

Information that is not restricted to private access and can be legally obtained by any member of the general public. This includes data published by governments, companies, and other entities.

Strong Form

In market efficiency theory, the strong form suggests that all information, both public and private, is reflected in stock prices.