Static concepts of multiproduct economies of scale and scope are extended into a dynamic setting within the cost of adjustment framework. Their most important properties are developed and the foundations for a dynamic theory of the firm that generalizes the neoclassical theory of the firm are presented. The dynamic measures of scope and scale as well as shadow costs are empirically estimated for multiple-output, multiple-input German "dairy" (arms operating under a production quota. Possible causes of economies of scope are explored and a conceptual model to predict the evolution of the production structure of German farms is formulated.