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Economies of scope

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Show graphically and explain how taking advantage of scope economies affects the market structure of an industry.

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Solution Summary

Economies of scope are where the production output of combining functions within a company are explicated.

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Hi,

Please find the attached graph.

Economies of scope are where the production output of combining functions within a company (producing two items instead of one, etc) is greater than the production output of the individual goods/activies added together. Stated slightly differently, the marginal costs of production are lower when you produce more goods. If you are ...

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