Question

The firm's minimum efficient scale occurs
A. when diseconomies of scale are falling.
O B. when constant returns to scale end and diseconomies of scale begin.
C. when economies of scale end and constant returns to scale begin.
OD. when economies of scale are rising.

Answer 1

The correct answer is:

**C. when economies of scale end and constant returns to scale begin.**

The minimum efficient scale (MES) is the point at which a firm has fully exploited all economies of scale and begins to experience constant returns to scale. Beyond this point, further increases in production do not lead to lower average costs, which is what distinguishes the MES from other production scales.