Question

In the 1990s there was tremendous interest by government officials in breaking up Microsoft into two companies. One of the companies would have produced operating systems for computers, like Microsoft Windows. The other company would have produced software for this operating system, like Microsoft Excel. Which concept from class could Microsoft use to argue that this breakup would increase total costs

Answer 1

Answer: Economies of scope

Step-by-step explanation:

Economies of scope refers to the

proportionate saving that's gained when a company produces two or more goods, such that the cost of producing the goods is less than the cost incurred when each good is separately produced.

In such case, the average total cost of production will reduce as a result of the rise in the number of different goods that are produced.

Therefore, the concept that Microsoft use to argue that this breakup would increase total costs is Economies of scope