If the minimum efficient scale in toaster production is 500, 000 units per year, the average cost of producing 300, 000 toasters is greater than the average cost of producing 500, 000.

Question

Quizplus · Accepted Answer

The minimum efficient scale in toaster production is 500,000 units per year, which means that the average cost of production will be lowest at this level of output. Producing 300,000 toasters is below the minimum efficient scale, which means that the average cost of production will be higher than producing 500,000 toasters. Therefore, the statement is true.

If the Minimum Efficient Scale in Toaster Production Is 500