Dear All:
What is the differences between economy of scale and economy of scope? I am so confused about this concepts.
Thank you so much for your time.
Dear All:
What is the differences between economy of scale and economy of scope? I am so confused about this concepts.
Thank you so much for your time.
There is a good expanation in Economics Level 1.
Economies of scale is when you produce more and thus are able to decrease costs, result from specialisation.
Economies of scope - is when you produce different products but use the same one department (like marketing etc.) to serve these different products. that is you get a decrease in cost by producing more different products.
PS. Economics Level 1 p.209.and also p.120.
More or less that. However, economies of scale are more to do with fixed cost than specialization. For instance, you need a grill to make 100 cheeseburgers. With the same grill, you can make 10,000 cheeseburgers. So through scale, you saved money on the incremental cheeseburgers by not having to purchase a new grill.