Question

“Economies of scope” exhibits when the joint cost of producing two or more goods is less...

“Economies of scope” exhibits when the joint cost of producing two or more goods is less than the sum of the separate costs. One of the examples is the oil refinery using the exhausted heat to cogenerate electric power. Please provide one more example of industry exhibiting economies of scope. An URL reference link to support your answer is a plus.

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Answer #1

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Economy of scope is applied by firms to reduce the cost of production by producing more than one good using the same facility, infrastructure and manpower. One example can be taken of carbonated beverage manufactures. They offer different soft drink products that are manufactured using the same manufacturing setup, technology and manpower. Also, warehouses and distribution channel of all these products in the market remain same. Thus, the cost of production comes down and economy of scope is applied.
(Name of the beverage manufacturer cannot be disclosed due to copyrights and related issues)
Web link for reference / reading:
https://www.linkedin.com/pulse/20140529170159-27554839-economies-of-scale-and-economies-of-scope-here-is-the-difference

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