Maintaining high minimum efficient scale allows a firm to hedge against currency risks.

Question

Quizplus · Accepted Answer

Maintaining high minimum efficient scale means that the firm is producing at the lowest possible cost per unit, which is achieved by maximizing production. Hedging against currency risks, on the other hand, involves financial strategies that aim to minimize potential losses due to fluctuations in exchange rates. These two concepts are not directly related, and one does not guarantee the other.

Maintaining High Minimum Efficient Scale Allows a Firm to Hedge