Define economies of scope Is this concept related to economi

Define economies of scope. Is this concept related to economies of scale? Explain.

Solution

We know that Economies of scope means that if the average total cost of production decreases as result of increasing different goods produced.

In sense that the economies of scope is closly related to the economies of scale. That is if we engaging more than on line of business may require a firm to have a certain minimum scale of operation.

But in economics both are different concept. The economies of scope is concentrated the average total ost of production on variety goods. But Economies of scale is the cost adventages when there is producing higher level goods.