What is Economies of scopes?
Economics of scope occur when products share common input
and diversification leads to cost savings. When production of two product
requires same input to be produced then both can be produced resulting in cost
saving.
Example
Usually it happens in a newspaper company that they produce
newspaper during night time which leaves the machine idle during day time. So newspaper
printing company can print papers during day time so as to increase their
revenue and save the cost of input because same machine are used to print at
day time.
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