If the Firm Has Already Reached the Minimum Efficient Scale

question 86

Multiple Choice

If the firm has already reached the minimum efficient scale, then

• A) any additional output will not result in a lower long run average cost.
• B) any additional output will result in a lower long run average cost.
• C) additional output will result in a lower long run marginal cost.
• D) the firm is profit maximizing in the long run.

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Definitions:

Consumer Surplus

The contrast between the total payment consumers are willing and financially able to make for a good or service and the amount they truly pay.

Producer Surplus

The discrepancy between the price producers agree to sell a good for and the price they actually end up receiving.

Economic Efficiency

A condition in which resources are allocated in the most effective way possible, maximizing outputs from given inputs without waste.

Allocative Efficiency

A state of resource allocation where goods and services are distributed according to consumer preferences, reflecting an optimal distribution of resources.