Economies of scope are the savings that come from producing two or more different outputs at a lower cost than producing each output individually.
Economies of scale are generated by volume, but economies of scope are formed by variety. In the field of economics, the terms "economies" and "scope" refer to expanding output and services through varied product offerings.
According to the economic principle known as "economies of scope," as the variety of items produced rises, so does the average overall cost of production.
For instance, a gas station can offer soda, milk, baked goods, etc. through its customer service staff, allowing the gas industry to save money.
For a business, economies of scale refer to cost savings that result from scaling up production of a single product type, whereas economies of scope refer to cost savings that result from manufacturing a variety of products.
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