If a Company Is Producing at a Level of Output

question 36

Multiple Choice

If a company is producing at a level of output at which the long-run average-total-cost curve reaches a minimum,the company:

• A)is experiencing economies of scale.
• B)is at minimum efficient scale.
• C)is experiencing increasing returns to scale.
• D)will shut down.
• E)is experiencing diseconomies of scale.

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Definitions:

Marginal External Cost

Increase in cost imposed externally as one or more firms increase output by one unit.

Socially Optimal Output

The level of production or output that is most beneficial for society as a whole, considering both production costs and externalities.

Market Price

Price prevailing in a competitive market.

Dynamic Inefficiencies

Inefficiencies that occur over time due to factors such as technological changes, market adjustments, or policy shifts, affecting long-term economic performance.