Suppose That Minimum Efficient Scale Is Approximately 20 Percent of Maximum

question 66

Multiple Choice

Suppose that minimum efficient scale is approximately 20 percent of maximum potential market demand.In that case,

• A)there will be approximately 20 firms in the market
• B)we should expect to see a few large competitors
• C)we should expect to see many small competitors
• D)we should expect a natural monopoly to emerge
• E)minimum efficient scale is too small for perfect competition to exist

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Definitions:

Variable

An element, feature, or factor that is liable to vary or change.

Fixed

Pertains to expenses that remain constant for a given period regardless of the level of production or business activity.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Estimated

An approximation or informed guess of a value, quantity, or outcome based on available data.