Consideration of the minimum efficient scale of operation would suggest that,to minimize production costs,the market should be served by a large number of small firms when the LRAC curve slopes downward over the relevant range of output.

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Consideration of the minimum efficient scale of operation suggests that to minimize production costs, the market should be served by a few large firms when the LRAC (long-run average cost) curve slopes downward over the relevant range of output. This is due to economies of scale, where larger firms can produce at a lower per unit cost than smaller firms.

Consideration of the Minimum Efficient Scale of Operation Would Suggest