Adam Smith's Example of the Pin Factory Demonstrates That Economies

question 40

True/False

Adam Smith's example of the pin factory demonstrates that economies of scale result from specialization.

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Definitions:

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced.

Average Variable Cost

The total variable cost of production divided by the number of units produced, indicating the variable cost per unit.

Break-even Point

The point at which total cost and total revenue are equal, meaning there is no profit or loss.

Average Total Cost (ATC)

Total cost divided by output.