What is the difference between economies of scale and economies of scope?

Suppose Nike's managers were considering expanding into producing sports beverages. Why might the company decide to do this under the Nike brand name?

Describe the change in average costs and the relationship between marginal and average costs under the following three conditions as quantities produced increase:

The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $30, $29, $20, $16, and $12. Five buyers are willing to buy one widget at the following prices: $10, $12, $20, $24, and $29. What is the equilibrium price and quantity in a competitive market?

a. In the accompanying diagram (which represents the market for chocolate candy bars), the initial equilibrium is at the intersection of S1 and D1. Circle the new equilibrium if there is an increase in cocoa prices.

b. In the same diagram, the initial equilibrium is at the intersection of S1 and D1. Circle the new equilibrium if there is rapid economic growth.

Graph for Problem 8-4 Chocolate Candy Bars Market S2 S1 S3 Price D2 D1 Quantity @ Cengage Learning