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.

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Definitions:

Consumption

The action of using goods or services for personal use, satisfaction, or to fulfill needs.

Expected Income Stream

The anticipated series of payments received over time, often from investments, employment, or other sources of income.

Permanent Income Hypothesis

A theory suggesting that people's consumption choices are based on their long-term average income rather than their current income.

Tax Cut

A reduction in the amount of taxes imposed by a government, aiming to stimulate economic growth or achieve other policy objectives.