Minimum Efficient Scale

question 215

Multiple Choice

Minimum efficient scale

• A) is the point at which economies of scale begin for a particular firm.
• B) is the lowest rate of output per unit of time at which long-run average costs reach a minimum for a particular firm.
• C) applies only to firms with U-shaped long-run average cost curves.
• D) is the point at which diseconomies of scale begin for a particular firm.

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Definitions:

Retention Ratio

The portion of a company's earnings that is not distributed as dividends but is retained by the business for reinvestment.

Retained Earnings

The portion of a company’s net profits that are kept within the company instead of being paid out to shareholders as dividends.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, often referred to as the bottom line.

Return on Equity

A financial ratio that measures the ability of a firm to generate profits from its shareholders' equity.