Much of the research on the minimum efficient scale suggests that for many firms the LRAC curve is:
A)downward sloping over the relevant range of output.
B)upward sloping over the relevant range of output.
C)U-shaped.
D)flat over a relatively large range of output levels.

Question

Quizplus · Accepted Answer

The minimum efficient scale refers to the lowest level of output at which a firm can produce a good or service at the lowest possible cost per unit. The LRAC curve shows how the average cost per unit of output changes as the scale of production increases. Research suggests that for many firms, the LRAC curve is relatively flat over a large range of output levels, indicating that they can achieve economies of scale without experiencing significant diseconomies of scale. Therefore, choice D is the best answer.

Much of the Research on the Minimum Efficient Scale Suggests