The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one hour (and $18,000), and after setting up, you can produce 1,000 units of a particular design per hour (at a cost of $8,000). Does this production exhibit scale economies or scope economies?

Looking at the scenario critically, we will clearly see the tendency of a scope economics. Scope economics basically hinges on getting a competitive advantage, essentially because of producing in large quantities and numbers. Riverside Ranger logo T-shirts exhibits this as it produce its products in large numbers, producing 1000 pieces of a particular design in 1 hour.

In same breath, we also have the scale economics exhibited by the organization. Taking a deeper look at the cost representation, we will see that the average cost tend to reduce as the production increases. Thus, an economic of scale is achieved here by leveraging on the mass and swift production style of Riverside Rangers logo T-shirts.

andromache andromache · Answer 2 · 2022-04-05T15:11:10+02:00

The production exhibit both scope economics and scale economics. Since They are not mutually exclusive.

An exhibit of production:

According to the given situation, here we see the tendency of the scope economics. In this, the competitive advantage should be considered since the production is to be done in large numbers. Riverside Ranger logo t-shirts should produce it very large numbers that means 1000 pieces in one hour

So based on this, we can say that The production exhibit both scope economics and scale economics. Since They are not mutually exclusive.

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