Match the items of List - II with the items of List - I and indicate the code of correct matching. The items relate to economies of scale/scope. List - I List - II (a) Economies of scale (i) arise with lower average costs of manufacturing a product when two complementary products are produced by a single firm (b) Internal economies ii) Mean lowering of costs of production by producing in bulk c) External economies (iii) Arise when cost per unit depends on size of the firm (d) Economies of scope (iv) Arise when cost per unit depends on the size of the industry, not the firm  

Mean lowering of costs of production by producing in bulk

• Economies of Scale refer to the cost advantage experienced by a firm when it increases its level of output.
• The advantage arises due to the inverse relationship between per-unit fixed cost and the quantity produced. 
• The greater the quantity of output produced, the lower the per-unit fixed cost.
•  Economies of scale also result in a fall in average variable costs (average non-fixed costs) with an increase in output.
• This is brought about by operational efficiencies and synergies as a result of an increase in the scale of production.

Arise when the cost per unit depends on the size of the firm

• Internal economies of a scale measure a company's efficiency of production and occur because of factors controlled by its management team.
•  Internal economies of scale apply to an individual business. 
• An increase in the overall size of operation – more staff, more facilities, more equipment, and larger purchasing orders – can, under the right circumstances, lead to lower per-unit production costs.

Arise when the cost per unit depends on the size of the
industry, not the firm

• "External” applies to an industry as a whole.
• As the automobile industry in a country grows larger, for example, it’s possible that average costs in the industry will decrease as suppliers to the industry lower the costs of their supplies as they compete with one another.
•  External economies of scale occur when a whole industry grows larger and firms benefit from lower long-run average costs. 
• External economies of scale are business-enhancing factors that occur outside a company but within the same industry.

Arise with lower average costs of manufacturing a product when two complementary products are produced by a
single firm

• The theory of an economy of scope states the average total cost of a company's production decreases when there is an increasing variety of goods produced. 
• For example, let’s say that you’re a shoe manufacturer. You produce men’s and women’s sneakers.
  Adding a children’s line of sneakers would increase economies of scope because you can use the same production equipment, supplies, storage, and distribution channels to make a new line of products.
• That will further reduce the cost of production on all your shoes.