The Minimum Efficient Scale Is Important in Determining

question 21

Multiple Choice

The minimum efficient scale is important in determining:

• A) the optimum level of input usage by a firm.
• B) the allocation of output between the multiple plants owned by a firm.
• C) the output elasticity of firms in the market.
• D) whether the firm's production function exhibits increasing, constant, or decreasing returns to scale.
• E) how many firms can profitably operate in a particular market.

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), representing a company's profit from regular operations, excluding non-operational income and expenses.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating the company's bottom line.