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:

Assembly Department

An area in a manufacturing plant where parts are put together to form the end products.

Overhead Rate

A calculated rate used to allocate overhead costs to products or services, usually determined by dividing total overhead costs by an allocation base.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated based on the estimated costs and activity levels before the period begins.

Job-Order Costing

An accounting system used to assign costs to specific jobs or batches, ideal for manufacturing or service environments where each job is distinct.