Assume That the Minimum Efficient Scale for a Typical Firm

question 24

Multiple Choice

Assume that the minimum efficient scale for a typical firm in an industry is 2 million units. The estimated output for the whole industry is 6 million units. Therefore, one can conclude that:

• A) the industry is a natural monopoly.
• B) the output produced in the industry is less than the perfectly competitive output.
• C) the industry experiences increasing returns to scale.
• D) the industry is likely to support 3 firms, each producing at minimum efficient scale.
• E) the price in the industry is higher than the perfectly competitive price.

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Definitions:

Disease Symptoms

Observable effects experienced by an individual resulting from a disease, which can include fever, fatigue, pain, and other physical and psychological changes.

Ether Linkages

Chemical bonds in which an oxygen atom connects two alkyl or aryl groups, commonly found in organic compounds and lipids like phospholipids.

Branched-Chain Hydrocarbons

Organic molecules consisting of carbon and hydrogen atoms arranged in a branched structure.

Ester Linkages

Chemical bonds formed between an acid and an alcohol with the elimination of water, commonly found in fats and biological molecules like DNA.