The figure below shows a family of cost curves for a firm. The subscripts 1, 2, and 3 for the SRATC curves refer to different plant sizes. FIGURE 8- 3
-Refer to Figure 8- 3. The minimum efficient scale is achieved by this firm at output level
A) Q3.
B) Q4.
C) Q2.
D) Q1.
E) Q5.

Question

The figure below shows a family of cost curves for a firm. The subscripts 1, 2, and 3 for the SRATC curves refer to different plant sizes.  FIGURE 8- 3
-Refer to Figure 8- 3. The minimum efficient scale is achieved by this firm at output level
A) Q3. 
B) Q4. 
C) Q2. 
D) Q1. 
E) Q5.

Quizplus · Accepted Answer

The minimum efficient scale is the lowest level of output at which a firm can achieve the lowest average cost. In Figure 8-3, this is typically represented by the output level where the long-run average cost curve first reaches its minimum point, which is at Q3.

The Figure Below Shows a Family of Cost Curves for a Firm