The ﬁxed costs of acquiring indivisible inputs can be spread out by increasing the scale of the company's operations.

Name: The ﬁxed costs of acquiring indivisible inputs can be spread out by increasing the scale of the company's operations.
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Question

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When the scale of operations increases, the fixed costs of acquiring indivisible inputs can be spread out over a larger output, resulting in lower average costs per unit of output. This is known as economies of scale.

The ﬁXed Costs of Acquiring Indivisible Inputs Can Be Spread