graph LR
	A[Economies of Scope] --> B[Multiple Products]
	A --> C[Cost Savings]
	B --> D[Shared Resources]
	B --> E[Complementary Goods]

## Which of the following best describes economies of scope? - [x] Producing multiple products reduces overall costs. - [ ] Producing more of a single product increases profits. - [ ] Only large companies can take advantage of it. - [ ] Reducing production costs leads to lower prices only for one product. > **Explanation:** Economies of scope refer to cost advantages gained by producing multiple products together rather than separately. ## An example of economies of scope would be: - [x] A company that makes bread and butter. - [ ] A factory producing only mobile phones. - [ ] A bookstore selling only a single author’s work. - [ ] An online store that only sells one type of shoe. > **Explanation:** Combining the production of bread and butter allows for shared resources and reduced costs, exemplifying economies of scope. ## When do economies of scale become relevant? - [ ] When businesses produce a variety of products. - [x] When businesses increase production of a single product. - [ ] When options for production are limited. - [ ] When a company introduces a new service. > **Explanation:** Economies of scale apply when increasing the volume of a single product, leading to lower costs per unit. ## What can negatively impact economies of scope? - [x] Managing a large product variety without expertise. - [ ] Increasing resource-sharing efficiency. - [ ] Consolidating operations and processes. - [ ] Producing co-related goods. > **Explanation:** If a company spreads itself too thin trying to manage too many diverse products, it could negate the benefits gained from economies of scope. ## Which of these is NOT an example of economies of scope? - [ ] A restaurant that serves both lunch and dinner. - [x] A factory making one type of mobile phone. - [ ] A dairy producing both milk and cheese. - [ ] A stitching service providing both clothing and alterations. > **Explanation:** The factory making one type of mobile phone does not represent economies of scope, as it only focuses on one product. ## Which is a benefit of economies of scope? - [ ] Higher production costs due to increased variety. - [x] Improved operational efficiency by sharing resources. - [ ] Limited market presence. - [ ] Higher prices for all products. > **Explanation:** Economies of scope achieve lower costs and increased operational efficiency through shared production inputs. ## What is a risk associated with pursuing economies of scope? - [ ] Lower costs and higher revenues. - [ ] Increased brand loyalty from product variety. - [x] Potential over-diversification and loss of focus. - [ ] Redundancy in production processes. > **Explanation:** While pursuing too many products, a company can risk losing focus, which undermines the quality of its offerings. ## Economies of scope can lead to: - [x] Competitive advantages through diverse offerings. - [ ] A greater focus on single-product excellence. - [ ] Reduced bargaining power with suppliers. - [ ] Increased complexity without benefits. > **Explanation:** Economies of scope can create a competitive edge through the variety of offerings and shared efficiencies. ## True or False: Economies of scope mean that all products must be entirely unrelated to each other. - [ ] True - [x] False > **Explanation:** Economies of scope imply that the products are often related and can be manufactured using shared resources. ## True or False: Economies of scale and economies of scope are the same thing. - [ ] True - [x] False > **Explanation:** They are different concepts; economies of scale refer to efficiencies gained from producing more of a single product, while economies of scope focus on the advantages of producing multiple products conjointly.