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.

For example, McDonalds can produce both hamburgers and French fries at a lower average cost than what it would cost two separate firms to produce the same goods. This is because McDonalds hamburgers and French fries share the use of food storage, preparation facilities, and so forth during production.

Another example is a company such as Proctor & Gamble, which produces hundreds of products from razors to toothpaste. They can afford to hire expensive graphic designers and marketing experts who will use their skills across the product lines. Because the costs are spread out, this lowers the average total cost of production for each product.

Investment dictionary. . 2012.

Look at other dictionaries:

  • Economies of scope — are conceptually similar to economies of scale. Whereas economies of scale primarily refer to efficiencies associated with supply side changes, such as increasing or decreasing the scale of production, of a single product type , economies of… …   Wikipedia

  • Economies of scope — Scope economies exist whenever the same investment can support multiple profitable activities less expensively in combination than separately. The New York Times Financial Glossary * * * economies of scope UK US noun [plural] ECONOMICS,… …   Financial and business terms

  • economies of scope — Scope economies exist whenever the same investment can support multiple profitable activities less expensively in combination than separately. Bloomberg Financial Dictionary * * * economies of scope UK US noun [plural] ECONOMICS, PRODUCTION ► the …   Financial and business terms

  • Economies of Scope — Dieser Artikel oder Abschnitt ist nicht hinreichend mit Belegen (Literatur, Webseiten oder Einzelnachweisen) versehen. Die fraglichen Angaben werden daher möglicherweise demnächst gelöscht. Hilf Wikipedia, indem du die Angaben recherchierst und… …   Deutsch Wikipedia

  • economies of scope — See: scope economies …   Accounting dictionary

  • economies of scope — See scope economies …   Big dictionary of business and management

  • Economies of Scope — Verbundvorteile; wirtschaftliche Vorteile, die bei diversifizierten Unternehmen auftreten können, die auf verschiedenen Märkten tätig sind (⇡ Mehrprodukt Unternehmung). Sie können in bestimmten Funktionsbereichen synergetische Effekte im Sinn von …   Lexikon der Economics

  • economies of scope — plural noun savings generated by combining the production processes of two or more product lines …   Australian English dictionary

  • economies of scope — Fin reductions in unit average costs caused by the simultaneous production of a number of related products, permitting benefits such as the sharing of joint costs over a larger volume than would otherwise be possible …   The ultimate business dictionary

  • scope economies — economies of scope The increases in efficiency and sales that can result from producing, distributing, and marketing a range of products, as opposed to a single product or type of product. Bancassurance is often seen as an example of scope… …   Accounting dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.