If Minimum Efficient Scale Is Small Relative to the Maximum

question 82

Multiple Choice

If minimum efficient scale is small relative to the maximum potential market,

• A)relatively large firms will have a cost advantage over relatively small firms
• B)the market price will be low
• C)relatively small firms will have a cost advantage over relatively large firms
• D)the market price will be high
• E)only one firm will survive in the long run.

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Definitions:

Principle of Diversification

A risk management strategy that mixes a wide variety of investments within a portfolio to minimize the impact of any single asset's performance.

Investment

An investment refers to the allocation of resources, usually money, in expectation of generating an income or profit, involving assets such as stocks, bonds, real estate, or commodities.

Risk

The degree of uncertainty associated with the return on an investment, often linked to the potential for losing some or all of the original investment.

Total Return

Total return is the full return on an investment over a specific time period, including capital gains and dividends, expressed as a percentage of the initial investment cost.