The Efficient Scale of the Firm Is the Quantity of Output

question 18

Multiple Choice

The efficient scale of the firm is the quantity of output that:

• A)maximises marginal product
• B)maximises average fixed cost
• C)minimises average total cost
• D)minimises average variable cost

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Definitions:

Short Run

A period in which at least one input or factor of production is fixed, allowing only some inputs to change.

Long Run

A period of time in economics during which all inputs and factors of production can be adjusted, allowing for full industry adjustment to changes.

Production

The process of combining inputs to make goods or services.

LAC Curves

The Long-Run Average Cost curves, which show the minimum average cost of production at different levels of output.