Exhibit 7.4 -Refer to Exhibit 7.4,which shows short-run average cost curves.Average cost is lowest for a medium plant when output is _____ A)at q. B)less than q_a. C)between q_a and q_b. D)more than q_b. E)more than q'.

Question

Quizplus · Accepted Answer

The lowest point of the average cost curve for a medium plant occurs between q_a and q_b. This is known as the minimum efficient scale, where the plant is operating at optimal efficiency and experiencing economies of scale. Therefore, producing output within this range will result in the lowest average cost for the firm.

Exhibit 7.4 -Refer to Exhibit 7.4,which Shows Short-Run Average Cost Curves.Average Cost