economies of scale and econmoies of scope final.docx

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Running head: ECONOMICS OF SCALE AND ECONOMIES OF SCOPE 1 Distinguishing between Economies of Scale and Economies of Scope Name Institution Affiliation
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ECONOMICS OF SCALE AND ECONOMIES OF SCOPE 2 1. What is the difference between an economy of scale and an economy of scope? Economics of scale is a term used by economists to show the cost advantage realized by a firm when it increases the amount of output. The quantity produced has an inverse relationship with the fixed cost of every unit and therefore increasing the number of output scales down the production cost. Also, economies of scale can be realized when there is a fall of average variable cost which increases output (Weller, Kleer, & Piller, 2015) . Most firms depend on the economies of scale to scale up their marginal profit. On the other hand, economies of scope is a term used by economists to illustrate the average cut down of the cost of production of every unit by diversifying on the varieties of products produced (Wells, 2016) . For instance, Uber Transport
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  • Spring '17
  • Economics, Economics of production, Panera Company, JAB Holding Company

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