What is the differant between economic of scope and economic of scale?and defintion for each one ?
Difference: Economies of scale arises from the advatages of operating at a higher scale than at a lower scale while economies of scope arises from the advantages of operating with a synergestic range of products within the same scale. Increasing the scale of output by installing additional plant and equipment to produce the same good leads to saving in raw material purchasing costs through discounts on higher quantity purchases and reductyion in managerial costs per unit of ouput. Widenening the range of products from the same plant and machinery leads to reduction in brand costs per unit ( savings in publicity and marketing costs) and lower machine dling time when the demand for different goods produced are negatively correlated ie. greater flexibilty in changing product mix to changes in demand. Definition of Economies of Scope An economic theory stating that the average total cost of production decreases as a result of increasing the number of different goods produced. Economies of
