Aaron is a manager at Crimson Inc., an American consumer electronics company. He believes that to make in-house production worthwhile, Crimson must make at least the minimum efficient scale. Which of the following is an accurate statement that supports Aaron's belief?
A) Crimson needs to plan its production process from start to finish in order to avoid carrying excess inventory.
B) Crimson needs to consider whether it can produce enough of the product to make an investment in the production process.
C) Crimson needs to make its products internally to achieve economies of scale.
D) Crimson needs to customize its products for different target markets.

Question

Quizplus · Accepted Answer

The minimum efficient scale is the lowest point where a company can produce its goods at a competitive cost. Aaron's belief is supported by the need to ensure that Crimson can produce enough to justify the investment in production, which aligns with option B.

Aaron Is a Manager at Crimson Inc