An important determinant of market structure is:
A)the difference between short-run average cost and long-run average cost for a given rate of output.
B)the elasticity of market demand where it intersects the industry supply curve.
C)the slope of the expansion path.
D)the level of output at which long-run average cost is at a minimum relative to market demand.

Question

Quizplus · Accepted Answer

The level of output at which long-run average cost is at a minimum relative to market demand is an important determinant of market structure. This point where minimum long-run average cost intersects with market demand is known as the efficient scale of production. Firms that operate at the efficient scale of production are most competitive and can potentially drive out less efficient producers from the market. Thus, this point plays a crucial role in determining the market structure.

An Important Determinant of Market Structure Is