# Question **Economies of scope reduce** - Marginal Cost of producing an additional unit of existing varieties - Marginal Cost of introducing a new variety - Average total cost of producing existing varieties - Variable cost of producing existing varieties --- ## Step 1: Understanding Economies of Scope **Economies of** occur when producing two or more together is cheaper than producing them separately. They arise when shared inputs, facilities, or processes lower the total cost. **Explanation:** Economies of scope are about cost savings from joint production, not just expanding output of one product. --- ## Step 2: Applying to the Answer Choices Let's analyze each option: - **Marginal Cost of producing an additional unit of existing varieties:** Economies of scope aren't primarily about lowering the marginal cost of one product, but about joint production. - **Marginal Cost of introducing a new variety:** Economies of scope can make it cheaper to introduce a new product by sharing resources, but the marginal cost refers specifically to the cost of one extra unit, not the total effect. - **Average total cost of producing existing varieties:** When products are produced together, the shared costs reduce the average total cost of each. - **Variable cost of producing existing varieties:** Variable costs may be affected, but economies of scope mainly impact average total cost due to shared fixed and variable inputs. **Explanation:** Economies of scope are best reflected in a reduction in the average total cost of producing multiple products together. --- ## Final Answer **Average total cost of producing existing varieties**