Question

a) Canada Post delivers packages for big and small companies. That fact they deliver all over a city every day, which simplifies the job: relative to a delivery company which works for one company, Canada Post benefits from economies of scope. Compared to the situation where consumers have to travel to the seller, show how using Canada Post would affect the market area of a seller who specializes in a good which is demanded by 0.1 percent of the population.

Answer 1

*canada post enjoys economies of scope.it delivers packages for both small and big companies.they deliver all over a city everyday,which means that they are highly competitive because they work for both type of companies.a seller that specialises in a single good would not enjoy economies of scope and the buyers have to reach the seller for buying the good,and the most important fact is that it is demanded by just 0.1% of population.so here if they use canada post,their market share will increase and their demand will increase more than 0.1% of population.this will happen because delivery will be given directly to the buyer which will influence the perception of more buyers in buying the product.