Economies of scope

Economies of scope,

Definition of Economies of scope:

  1. Economies of scope describe situations in which the long-run average and marginal cost of a company, organization, or economy decreases, due to the production of some complementary goods and services. An economy of scope means that the production of one good reduces the cost of producing another related good.

  2. While economies of scope are characterized by efficiencies formed by variety, economies of scale are characterized by volume. The latter involves the reduction of the average cost, or the cost per unit, that stems from increasing production for one single type of product. Economies of scale helped drive corporate growth in the 20th century, for example through assembly line production.

  3. Reduction in long-run average and marginal costs, due to the production of similar or related goods or services where the output or provision of an item A reduces the cost of item B. See also economies of scale.

How to use Economies of scope in a sentence?

  1. You should try and break down the economies of scope and figure out what the best way to proceed is.
  2. Economies of scope can result from goods that are co-products or complements in production, goods that have complementary production processes, or goods that share inputs to production.
  3. Economies of scope differ from economies of scale, in that the former means producing a variety of different products together to reduce costs while the latter means producing more of the same good in order to reduce costs by increasing efficiency.
  4. You should try and break down the economies of scope and figure out what the best way to proceed is.
  5. We were looking into our economies of scope to see what was going on and what we needed to do to make business run smoother.
  6. Economies of scope describe situations when producing two or more goods or services together results in a lower cost than producing them separately.

Meaning of Economies of scope & Economies of scope Definition