More Production, More Variety But Lesser Cost

ECONOMIES OF SCOPE

Economies of scope is an economic concept, which defines that the unit cost of a production will decline as the variety of products increases. In simple terms the more but similar looking goods you produce, the lesser will be the cost of production for each one.

For Example:

If you are a shoe manufacturer producing men and women sneakers, adding a kids line would not increase the Economies of Scope because you can use the same raw material. Also the similar distribution channel, inventory can later help in minimizing the cost to further extent.