With economies of scale,a firm can continue to lower its cost per unit by increasing output
A)without limit
B)up to the minimum efficient scale
C)until the firm is meeting market demand single-handedly
D)to some point between the minimum efficient scale and the market demand curve
E)halfway to the minimum efficient scale

Question

Quizplus · Accepted Answer

Economies of scale allow a firm to lower its cost per unit as it increases its output, but this reduction in cost is only possible up to a certain scale of production. This is often referred to as the minimum efficient scale (MES), which is the level of production at which a firm can realize the lowest possible average cost per unit. Beyond this point, further increases in output may result in diseconomies of scale, where the cost per unit begins to increase. Therefore, the correct choice is option B, up to the minimum efficient scale.

With Economies of Scale,a Firm Can Continue to Lower Its