What is the term for the savings that result from producing multiple outputs at a lower cost than producing each output separately?

The term that describes the savings achieved by producing multiple outputs more efficiently than if each output were produced separately is economies of scope. This concept highlights how a company can reduce costs by spreading its resources and operational expenses across various products or services. When organizations share operational capabilities, such as technology, distribution, or marketing, they can benefit from cost efficiencies that arise from the diversification of their product lines.

In contrast, economies of scale refer to cost savings that result from increasing the volume of production of a single product or output, where larger production runs lead to lower per-unit costs. Operating leverage pertains to the degree to which a firm can increase its profits by increasing sales while cost advantage generally refers to any situation where a firm can produce goods or services at a lower cost compared to competitors. Therefore, the correct identification of economies of scope is crucial for understanding how companies can strategically manage their resources to optimize production across multiple offerings.