A firm's minimum efficient scale is defined as
A)the output level at which LRATC first reaches its minimum level
B)any output level at which LRATC is minimized
C)the highest output level at which LRATC takes on its minimum value
D)the output level at which the firm charges its highest price
E)the lowest output level at which the firm can charge a positive price

Question

Quizplus · Accepted Answer

The minimum efficient scale is defined as the output level at which LRATC (long-run average total cost) first reaches its minimum level. This means that the firm is producing at the lowest possible average cost per unit and any increase in output beyond this point will cause costs to rise. Therefore, Option A correctly defines the minimum efficient scale of a firm.

A Firm's Minimum Efficient Scale Is Defined as