Question

What does the minimum efficient scale measure?


The smallest output level at which short-run average total cost is minimized.


a

The smallest output level at which short-run total cost is minimized.


b

The smallest output level at which long-run average total cost is minimized.


c

The largest output level at which long-run average total cost is minimized.


d

The largest output level at which long-run total cost is minimized.

Answer 1

c

The minimum efficient scale is the smallest output at which long-run average total cost is minimized (where economies of scale are fully exploited).