Economies of Scope

question 87

Multiple Choice

Economies of scope

• A)are cost reductions that flow from cost-saving strategic fits along the value chains of related businesses in the business lineup of a multibusiness corporation.
• 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:

Households

Economic units consisting of all individuals who occupy a home, responsible for making consumption decisions.

Market System

In this model, the economic operations regarding investments, the scale of production, and the distribution strategy are guided by supply and demand laws, ensuring that the pricing of goods and services is freely determined through a system of unrestricted prices.

Business Risk

The potential for financial loss or failure that a business faces due to factors like market fluctuations, competition, and management decisions.

Entrepreneurs

Individuals who organize, operate, and assume the risks for business ventures, acting as the driving force behind innovation and economic growth.