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The ‘indivisibility of large scale, more efficient processes of production’ is a source of technical economies...

The ‘indivisibility of large scale, more efficient processes of production’ is a source of technical economies of scale. True/False

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Answer #1

The correct answer is "True"

Explanation - For large companies, it makes sense to invest in an expensive (but indivisible) capital input and this is referred to as "Technical Economies of Scale." Just as an example, Wal-Mart has an advanced inventory database technology that reduces transportation and distribution costs. This same technology does not make sense for a small company as the added cost is significant. Specialization of labor force to boost productivity is yet another example of technical economies of scale.

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