​Lowering of costs that a firm often experiences when it produces two or more products together than each alone is known as ____________.​

Correct option is B

Economies of Scope refer to the cost advantages a firm gains by producing a variety of products together rather than producing each product separately. When a company shares resources, technologies, or processes across different products, the average cost of production decreases because of shared inputs and capabilities. This is different from economies of scale, which refer to cost advantages due to increased volume of a single product.

For example, a dairy company producing both milk and cheese might use the same milk supply and processing facilities, lowering costs per unit of both products compared to producing them independently.

Information Booster:

• Economies of scope arise from producing multiple products using common resources.

• It leads to cost savings by diversification and sharing inputs (machinery, marketing, distribution).

• Helps firms to be more competitive and expand product lines efficiently.

• Often seen in conglomerates and diversified companies.

• It encourages firms to utilize existing assets more fully.

• Important in industries with high fixed costs and related products.

Additional Knowledge:

(a) Economies of scale

• Economies of scale occur when the cost per unit decreases with increased production volume of a single product.

• It is about scale or size of production, not diversity of products.

• Examples include bulk buying of raw materials, mechanization, or specialized labor.

(c) Economies of Specialisation

• Economies of specialization focus on efficiency gains by focusing on a narrow range of tasks or products.

• It is related to division of labor and expert skill development, rather than cost savings through producing multiple products.

(d) Technical Efficiency

• Technical efficiency refers to the optimal use of resources to produce maximum output without waste.

• It does not specifically address cost savings related to multi-product production.