Economics Short Run Vs Long Run Costs Questions
Economies of scope in the long run refer to the cost advantages that a firm can achieve by producing a variety of products or services together. It occurs when the total cost of producing multiple products is lower than the sum of producing each product separately. This is often achieved through shared resources, such as production facilities, distribution networks, or marketing efforts, which can be utilized more efficiently when producing a range of products. By diversifying their product offerings, firms can benefit from economies of scope, reducing their overall costs and increasing their profitability in the long run.