Question

The yet to be concluded merger of Sprint, T-Mobile, and Metro PCS. How are the concepts of economies of scope and economies of scale different? How do they differ within the context of your chosen scenario? What are the synergies that come from the economies of scope? What are the synergies that come from the economies of scale?

Answer 1

The companies combined networks and economies of scale allow them to get even more aggressive with mobile.Economists know these as economise of scale and economise of scope.comparison economies of scale and economies scope meaning it refers to saving cost due to increase in output produced. Economies of scope focus on the average total cost production of a variety of goods.In contrast economies of scale focus on the cost advantage that arises when there is a higher level of production for one good.

Economies of scope is an economic concept that the unit cost to produce a product will decline as the variety of products increases. That is the more different but similar goods you produce ,the lower the total cost to produce each one.for example lets say that you are a shoe manufacturer.

A synergy is any effect that increases the value of a merged firm above the combined value of the two separate firms.synergies may arise in M&A transactions as a result of an increase in the scale of production.