INDIVISIBILITIES
The returns to many indivisible investment projects, such as bridges, dams, rail lines,
and electrical plants, depend on economies of scale in the use of technology, capital,
or labor (see Chapter 5). Electricity can be generated, for example, in small-scale coal
or oil-based steam plants or in large-scale hydroelectric or nuclear power plants.
The benefit–cost calculation still applies in the presence of indivisibilities. How-
ever, they make the role of engineers and others who formulate the project more
important. Thus, before evaluating a project on the basis of a given technology and
scale, the project evaluator should be certain to ask engineers and others if all feasible
technologies and scales have been considered (Yotopoulos and Nugent 1976:374)