Consider the efficiency of various market structures and complete the following sentence.The larger the minimum efficient scale of firms,ceteris paribus,the
A)more likely we are to have a concentrated market and allocative inefficiency.
B)less the tendency toward monopoly inefficiency.
C)lower the advantages of large-scale production.
D)greater the number of firms comprising an industry.
E)more likely firms will display productive efficiency.

Question

Quizplus · Accepted Answer

A larger minimum efficient scale implies that fewer firms can efficiently operate in the market, leading to a more concentrated market structure, which can result in allocative inefficiency due to reduced competition.

Consider the Efficiency of Various Market Structures and Complete the Following