Asked by Mindy Bounheuangvilay on Jun 26, 2024
Verified
A firewood supplier has a very seasonal demand for its product.Its transport trucks lay idle during the warmer parts of the year.It can exploit economies of scope if
A) It merges with a manufacturer of wooden Christmas ornaments
B) It turns into a rental trucking company during the warmer months for other seasonal producers such as ice-cream makers
C) It starts producing other seasonal products that would sell mostly during the warmer months such as rustic lawn chairs
D) B and C
Economies Of Scope
Cost advantages that result from a firm's ability to produce multiple products more efficiently together than separately.
Seasonal Demand
Fluctuations in the demand for certain products or services that occur at specific times of the year.
- Achieve comprehension of economies and diseconomies of scope.
Verified Answer
SD
Soyeb DungariaJul 01, 2024
Final Answer :
D
Explanation :
By diversifying into rental trucking services for other seasonal producers during the warmer months and producing other seasonal products, the firewood supplier can exploit economies of scope. This will allow them to utilize their idle transport trucks while generating additional revenue and expanding their customer base. Therefore, options B and C together would be the best choice.
Learning Objectives
- Achieve comprehension of economies and diseconomies of scope.