Question

Give the relationship between economies of scale of production and indivisibility.

Answer 1

The idea of indivisibility is occasionally linked to the scare of production. There are some manufacturing factors that cannot be divided. They cannot be taken in tiny amounts. For instance, a factory requires a truck in order to transport both finished goods and raw materials. Half or a third of a truck is beyond his means to buy. You have to buy a whole truck. Therefore, the investment in the truck will be useless if the manufacturing size is so small that the truck's transport capability is not fully exploited. A certain level of production scale must be achieved if the truck is to be used to its full potential. Large-scale manufacturing is thus a result of the presence of invisible elements of production.