Question 1

For an industry in which average costs continue to decline as output rises, what would you expect the minimum efficient scale to be? Explain your answer.

Accepted Answer

The answer of For an industry in which average costs...

Question 2

The lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum defines
A) maximum efficient scale.
B) minimum efficient scale.
C) allowable efficient scale.
D) short-run efficient scale.

Accepted Answer

The minimum efficient scale is the lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum. This means that if the firm produces any less than this minimum efficient scale, its long-run average costs will increase, and if it produces more than this minimum efficient scale, its long-run average costs will also increase. Therefore, the minimum efficient scale is the most efficient rate of output for the firm.

Question 3

What is minimum efficient scale? Why is it important?

Accepted Answer

The answer of What is minimum efficient scale? Why is...

Question 4

The lowest rate of output per unit of time at which long-run average costs for a particular firm are at a minimum is
A) economies of scale.
B) diseconomies of scale.
C) constant returns of scale.
D) minimum efficient scale.

Accepted Answer

The lowest rate of output per unit of time at which long-run average costs for a particular firm are at a minimum is known as the minimum efficient scale (MES), which is achieved when the firm fully utilizes its production capacity and all inputs are used efficiently. At this level of output, the firm is producing at the lowest possible cost per unit, which enables it to compete effectively in the market. Choices A, B, and C do not accurately describe this specific concept of minimum efficient scale.

Question 5

The minimum efficient scale in the figure below shows that 
A) point A is the minimum efficient scale (MES) for the firm.
B) point B is the minimum efficient scale (MES) for the firm.
C) the long-run average cost curve (LAC) reaches a minimum point at B.
D) the minimum efficient scale (MES) illustrates maximum average costs.

Accepted Answer

The answer of The minimum efficient scale in the figure...

Question 6

"If an industry's minimum efficient scale is between 2,000 and 4,000 units of output, then a firm producing 2,000 units of output in that industry has a cost-saving advantage over another firm producing 4,000 units of output in the same industry." Do you agree or disagree? Explain.

Accepted Answer

The answer of "If an industry's minimum efficient scale is...

Question 7

When the minimum efficient scale occurs at a high level of industry output
A) the firms in the industry will be producing in the diseconomies of scale portion of the curve.
B) there will only be a few firms in the industry.
C) the government will have to take over the production of the good since it will be unprofitable for firms.
D) there will be a lot of firms in this industry.

Accepted Answer

When the minimum efficient scale occurs at a high level of industry output, it means that production on a large scale is necessary to keep costs low. This typically results in economies of scale, which allow larger firms to produce at a lower cost than smaller firms. As a result, there will only be a few firms in the industry since it is difficult for small firms to compete with larger, more efficient firms. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect as they do not accurately describe the situation when minimum efficient scale occurs at a high level of industry output.

Quiz 22: The Firm: Cost and Output Determination

For an industry in which average costs continue to decline as output rises, what would you expect the minimum efficient scale to be? Explain your answer.

The lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum defines

What is minimum efficient scale? Why is it important?

The lowest rate of output per unit of time at which long-run average costs for a particular firm are at a minimum is

The minimum efficient scale in the figure below shows that

"If an industry's minimum efficient scale is between 2,000 and 4,000 units of output, then a firm producing 2,000 units of output in that industry has a cost-saving advantage over another firm producing 4,000 units of output in the same industry." Do you agree or disagree? Explain.

When the minimum efficient scale occurs at a high level of industry output