The efficient scale of the firm is the quantity of output that:
A)maximises marginal product
B)maximises average fixed cost
C)minimises average total cost
D)minimises average variable cost

Question

Quizplus · Accepted Answer

The efficient scale of the firm is where the average total cost (ATC) is minimized. This occurs at the point where the economies of scale have been fully exploited, but before diseconomies of scale set in. At this point, the firm is producing at the lowest possible cost per unit and maximizing its profits. Therefore, choice C is the correct answer.

The Efficient Scale of the Firm Is the Quantity of Output