What is the minimum efficient scale?
A)The level of output where diminishing returns have not set in yet.
B)The plant size that yields the most profit.
C)The level of operation where long-run average costs are lowest.
D)The smallest output level where the firm finally reaches productive efficiency.

Question

Quizplus · Accepted Answer

The minimum efficient scale refers to the level of operation where long-run average costs are at their lowest. This means that the firm is producing at the most efficient level possible, which ensures that costs are minimized and profits are maximized. Option A is incorrect because the minimum efficient scale is beyond the point where there are diminishing returns. Option B may not necessarily be the most efficient plant size, and Option D is incorrect because it refers to "productive efficiency," which is a different concept from the minimum efficient scale.

What Is the Minimum Efficient Scale