Minimum Efficient Scale Is Defined as the Level of Output

question 310

Multiple Choice

Minimum efficient scale is defined as the level of output at which

• A)all economies of scale are exhausted.
• B)diminishing returns affect average total cost.
• C)the firm's long-run average total cost starts falling.
• D)the maximum output is produced.

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Definitions:

Selling Price

The price at which goods or services are offered to consumers.

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent or salaries.

Variable Expenses

Expenses that vary in direct proportion to changes in an activity or production level, similar to variable costs.

Fixed Costs

These are expenses that do not change with changes in the production volume or sales, such as rent, salaries, and insurance.