Economies of scope Flashcards
(3 cards)
1
Q
What is it
A
When unit costs are lower as a business produces a wider range of products
2
Q
How does it occur
A
Example - supermarkets as they offer a huge variety of products people are likely to make several purchases which spreads the business’ fixed costs over more units
3
Q
Problems
A
Depending on market it may be best to specialise in one product instead of selling many
May lack expertise when trying to manage multiple product lines (can’t rush)
