The Minimum Efficient Scale of a Firm

question 157

Multiple Choice

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.

---

Definitions:

Rational Approach

A decision-making process based on logical, systematic analysis of data and information to optimize outcomes.

Aggregate Demand

This is the total demand for all goods and services within an economy at a given overall price level and in a given time period.

Potential Output

The highest level of real GDP that an economy can achieve when using its resources fully and efficiently, without causing inflation.

Nominal Wages

The amount of money paid to workers before considering the effects of inflation on purchasing power.