Explain why in the case of economies of scope the production possibili

Explain why in the case of economies of scope the production possibility frontier is bowed outward.

What will be an ideal response?

ANSWER

With economies of scope a firm uses less resources if it produces 2 goods jointly instead of producing the 2 goods in two firms separately. This means that the firm can produce more of the 2 goods when the goods are produced jointly. Hence, the PPF is bowed outward.