Production having Two Outputs -Economies of Scope

*  Economies of scope exist when joint output of a single firm is greater than the output which could be achieved by two different firms each of them producing a single output.

* Examples:

-The farm of chicken produces poultry and eggs

- Automobile produces cars and trucks

- University Teaching and research

*  What are advantages of joint production?

-An automobile company producing cars and tractors

* Advantages

 1) Both of them use capital and labor.

 2) The firms share resources management.

 3) Both use the same labor skills and type of machinery.