In which of the following situations would the minimum efficient scale of operation provide little or no guidance regarding how many firms should serve the market to minimize production costs?
A)When the LRAC curve slopes downward over the relevant range of output.
B)When the LRAC curve hits its minimum point at a relatively low level of output and then increases and the demand for output is quite large.
C)When the LRAC curve hits its minimum point at a relatively low level of output but then remains constant as the scale of operation is increased and the demand for output is quite large.
D)When the LRAC curve initially increases and then decreases beyond some point.

Question

Quizplus · Accepted Answer

When the LRAC curve remains constant after hitting its minimum point, it indicates that firms can operate efficiently at various scales, making it difficult to determine the optimal number of firms based solely on production costs.

In Which of the Following Situations Would the Minimum Efficient