Suppose a firm builds a larger plant and increases its output.Which of the following statements is correct?
A)Its MES output must increase.
B)Its MES output will decrease.
C)It will be able to achieve its MES output only if it also achieves economic capacity.
D)Its short-run average cost curve for the original plant will have shifted down.
E)Its long-run average costs must have increased.

Question

Quizplus · Accepted Answer

The firm can achieve its Minimum Efficient Scale (MES) output if it also achieves economic capacity, which is the level of output where long-run average costs are minimized.

Suppose a Firm Builds a Larger Plant and Increases Its