The minimum efficient scale of a firm: A

Economics Dec 07, 2020

The minimum efficient scale of a firm:

A. is realized somewhere in the range of diseconomies of scale,

B. occurs where marginal product becomes zero,

C. is in the middle of the range of constant returns to scale,

D. is the smallest level of output at which long-run average total cost is minimized.

Expert Solution

Option D. is the smallest level of output at which long-run average total cost is minimized is correct

This option is correct because efficiency exists at the level of output where the long-run average cost is less than the production level. It means maximum production at a lesser cost. It shows the minimum efficient scale of a firm in an economy.

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