A refiner produces heating fuel and gasoline from crude oil in virtually fixed proportions. What can you say about economies of scope for such a firm? What is the sign of its measure of economies of scope, SC?
The cost benefits of simultaneous manufacturing do not exist and there are thus no economies as well as range disadvantages. A further explanation is provided below.
Explanation:
Scope savings are environmental impacts if a variety of commodities are produced collectively when producing these commodities collaboratively is far less costly than individually.
Throughout this case, the manufacturer can create two items from the main resource although manufacturing takes place in some kind of a set proportion. Therefore includes the amount of production is identical to the expenditure of combined production of the products.
