Question

A refiner produces heating fuel and gasoline from crude oil in virtually fixed proportions. What can you say about economies of scope for such a firm? What is the sign of its measure of economies of scope, SC?

Answer 1

The cost benefits of simultaneous manufacturing do not exist and there are thus no economies as well as range disadvantages. A further explanation is provided below.

Step-by-step explanation:

• Scope savings are environmental impacts if a variety of commodities are produced collectively when producing these commodities collaboratively is far less costly than individually.
• Throughout this case, the manufacturer can create two items from the main resource although manufacturing takes place in some kind of a set proportion. Therefore includes the amount of production is identical to the expenditure of combined production of the products.

Thus the above is the appropriate solution.