Suppose that minimum efficient scale as a percentage of U.S. consumption is 5 percent in industry X and it is 10 percent in industry Y. It follows that we would expect to find
A)fewer firms in industry Y than X.
B)fewer firms in industry X than Y.
C)bigger firms in industry Y than X.
D)bigger firms in industry X than Y.
E)none of the above

Question

Quizplus · Accepted Answer

A higher minimum efficient scale as a percentage of consumption in industry Y suggests that firms need to be larger to achieve efficiency, leading to fewer firms compared to industry X.

Suppose That Minimum Efficient Scale as a Percentage of U