The minimum efficient scale for a firm is the
A)lowest rate of output at which long-run average cost is at a minimum
B)lowest rate of output at which short-run average total cost is at a minimum
C)lowest rate of output at which short-run average variable cost is at a minimum
D)average of the rates of output at which long-run average cost is at a minimum
E)average of the rates of output at which short-run average total cost is at a minimum

Question

Quizplus · Accepted Answer

The minimum efficient scale for a firm is the lowest rate of output at which long-run average cost is at a minimum. This means that the firm is producing at the most efficient level, taking into account all inputs and technology available in the long run. At this output level, the firm is able to achieve economies of scale which allow it to produce at the lowest possible cost per unit, maximizing profits.

The Minimum Efficient Scale for a Firm Is the