Asked by Katie Uittenbogaard on Apr 28, 2024
Verified
What is the economies of scope character for a firm that has a straight-line product transformation curve?
A) Economies of scope (SC > 0)
B) Diseconomies of scope (SC < 0)
C) SC = 0
D) SC = 1
Product Transformation Curve
A graphical representation showing the maximum number of two goods or services that an economy can produce with available resources and technology, demonstrating the trade-offs and opportunity costs.
Economies of Scope
Cost advantages that a business experiences by producing a wider variety of products, rather than specializing in one product or service.
- Understand the concept of economies of scope and how it differs from economies of scale.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
C
Explanation :
A straight-line product transformation curve means that the firm is able to produce a range of products with the same level of efficiency. Therefore, the firm does not experience any economies or diseconomies of scope. The SC value (SC = 0) is equal to the ratio of the cost of producing two products together versus the cost of producing them separately.
Learning Objectives
- Understand the concept of economies of scope and how it differs from economies of scale.