Question

A proportionate saving gained by producing two or more distinct goods, when the cost of doing so is less than that of producing each separately.

Answer 1

Economies of scope occur when the cost of producing multiple goods together is less than producing each good separately. It allows businesses to diversify their product offerings while reducing costs.

Step-by-step explanation:

In economics, the concept described in the question is known as economies of scope. Economies of scope occur when the cost of producing multiple goods together is less than producing each good separately. This is because producing multiple goods together allows for shared resources and efficiencies.

For example, a company that produces both bicycles and scooters can achieve economies of scope by using the same production facilities, machinery, and labor for both products. This saves on costs compared to producing bicycles and scooters separately.

Economies of scope can be advantageous for businesses as it allows them to diversify their product offerings while reducing costs. It can also lead to increased efficiency and competitiveness in the market.