Reference no: EM132387967

Manufacturing vehicles requires purchasing very expensive and sophisticated equipment as well as hiring many engineers. Your friend who works at the corporate headquarters of vehicle manufacturer Kneesawn lets you sit in on a meeting. At that meeting, the chief executives of Kneesawn debate whether or not to introduce a new model to its product line (a sports car tentatively called the Boikmobile). A Kneesawn VP provides two benefits for introducing the new model to its product line: (i) the company already has the robotics/factory/assembly line for manufacturing vehicles, so that introducing a new model will not require duplicating those costs, and (ii) the company already has a basic design for the engine/transmission/radiator/brakes under the hood that it could easily adapt to the Boikmobile.

Which of the two benefits listed by the VP correspond to economies of scale and/or economies of scope? There may be overlap.