Question

Which of the following statements correctly compares/contrasts economies of scale and economies of scope?a) economies of scale result from decline in the average cost of production as volume increases, whereas economies of scope result from decline in the average cost of production due to the outsourcing of resources across products and services.b) Economies of scope result from decline in the average cost of production per unit as volume increases whereas economies of scale result from decline in the average cost of production due to the sharing of resources across product and services.c) Economies of scope result from decline in the aggregate cost of production as volume increases, whereas economies of scale result from decline in the aggregate cost of production due to the outsourcing of resources across product and servicesd) economies of scale result from decline in the average cost of production per unit as volume increases whereas economies of scope result from decline in the average cost of production due to the sharing resources across products and services.

Answer 1

Answer:

d) economies of scale result from decline in the average cost of production per unit as volume increases whereas economies of scope result from decline in the average cost of production due to the sharing resources across products and services.

Answer 2

Economics of scale result from the decline in the average cost of production as volume increases, whereas economies of scope result from the decline in the average cost of production due to the outsourcing of resources across products and services

The following information should be considered:

• In the case of Economies of scale there is the Reduction in avg cost per unit with an increase in volume.
• While on the other hand, in the case of Economies of scope There should be the reduction in avg cost of production because of producing two distinct products and services.

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