We can increase our income with the help of limited resources present with us. This can be make possible with help of a 'Economic concept called Economics of scope'.
Economics of scope can be defined as "when different products share common input and diversification leads to cost savings".
This can be explained with one live example in my life where I came from a village, near to my village there is a town in which there is one famous sweet shop which is very popular in the district so they the sweet shops owners are enjoying the profits from long run.
After some years with rise of shops and competitions the sales of the sweet shop is effected so in order to increase there profits they came up with an idea by dividing the shop into two parts and started a restaurant in that second part so by the time there profits keep increasing.
so here the sweet shop owners understood the concept of Economics of Scope so they used the same input(shop) for different outputs (sweets and restaurant) to increase the profits of the owners and they can reduce the cost by utilizing the same input for different products
so, with this I can say that we can increase our income with limited inputs If we understand Economics of Scope properly
Economics of scope can be defined as "when different products share common input and diversification leads to cost savings".
This can be explained with one live example in my life where I came from a village, near to my village there is a town in which there is one famous sweet shop which is very popular in the district so they the sweet shops owners are enjoying the profits from long run.
After some years with rise of shops and competitions the sales of the sweet shop is effected so in order to increase there profits they came up with an idea by dividing the shop into two parts and started a restaurant in that second part so by the time there profits keep increasing.
so here the sweet shop owners understood the concept of Economics of Scope so they used the same input(shop) for different outputs (sweets and restaurant) to increase the profits of the owners and they can reduce the cost by utilizing the same input for different products
so, with this I can say that we can increase our income with limited inputs If we understand Economics of Scope properly
No comments:
Post a Comment