If the minimum efficient scale in rough diamond mining is 30,000 diamonds per year,

Question

Quizplus · Accepted Answer

The minimum efficient scale in rough diamond mining is 30,000 diamonds per year, which means that the average cost of mining 2,000 diamonds would be higher than the average cost of mining 30,000 diamonds. This is because the fixed costs of mining, such as equipment and labor, are spread over a smaller number of diamonds when producing only 2,000 diamonds, leading to higher average costs. Therefore, it is not efficient for the firm to produce only 2,000 diamonds.

If the Minimum Efficient Scale in Rough Diamond Mining Is