The ABC Company manufactures routers that are used to provide high-speed Internet service.ABC sells an average of 1,000 routers each month, but to exhaust economies of scale in its industry ABC would have to sell 3,000 routers each month.Therefore,
A)ABC is experiencing diseconomies of scale.
B)ABC is experiencing diminishing returns.
C)to reach minimum efficient scale ABC would have to sell at least 3,000 routers each month.
D)ABC will soon go out of business.

Question

Quizplus · Accepted Answer

The statement suggests that to exhaust economies of scale in its industry, ABC would have to sell 3,000 routers each month, which implies that it has not yet reached minimum efficient scale. Therefore, the correct answer is C. Choices A, B, and D are incorrect because there is no evidence to suggest that ABC is experiencing diseconomies of scale, diminishing returns, or is going out of business.

The ABC Company Manufactures Routers That Are Used to Provide