Minimum Efficient Scale Refers to the

question 56

Multiple Choice

Minimum efficient scale refers to the

• A)smallest plant size a firm can utilize and still maintain production.
• B)lowest point on a given SRATC curve.
• C)output level at which the LRATC curve touches each SRATC curve.
• D)lowest output level at which average total costs are minimized.

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Definitions:

Equipment

Tangible assets used in operations, such as machinery or office hardware, which are not intended for sale in the regular course of business.

Cash Flow

The net amount of cash being transferred into and out of a business, especially in terms of operational, investing, and financing activities.

Operating Activities

Activities directly connected to the primary revenue-producing operations of a company, reported in the statement of cash flows.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value of the asset as it is used.