The equation below gives the degree of economies of scope (SC): SC =

The equation below gives the degree of economies of scope (SC):

SC = (C(Q1 ) + C(Q2 ) – C(Q1,Q2 )) / C(Q1,Q2 )
where C(Q1 ) is the cost of producing output Q1, C(Q2 ) is the cost of producing output Q2, and C(Q1,Q2 ) is the joint cost of producing both outputs. If SC is negative:
A) there are neither economies nor diseconomies of scope.
B) there are economies of scope.
C) there are diseconomies of scope.
D) there are both economies and diseconomies of scope.

ANSWER

C