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Fixed costs are those costs that remain fixed
no matter how long the time horizon is.
32. Diseconomies of scale often arise because
higher production levels allow specialization among workers.
33. The fact that many decisions are fixed in the
short run but variable in the long run has little impact on the firm’s cost
34. In some cases, specialization allows larger
factories to produce goods at a lower average cost than smaller factories.
35. The use of specialization to achieve
economies of scale is one reason modern societies are as prosperous as they
36. As a firm moves along its long-run average
cost curve, it is adjusting the size of its factory to the quantity of
37. Because of the greater flexibility that firms
have in the long run, all short-run cost curves lie on or above the long-run
38. There is general agreement among economists
that the long-run time period exceeds one year.
39. Adam Smith’s example of the pin factory
demonstrates that economies of scale result from specialization.