Question

The minimum efficient scale ______.

A

is the smallest output at the minimum long run average cost

B

determines the number of firms that can be in an industry

C

is technically efficient

D

all of the above

Answer 1

Answer: D. all of the above.

The minimum efficient scale is that the lowest cost at which the firms can operate such that long run monetary value is minimized. The minimum efficient scale is technically efficient as the term technically efficient is that if the firm is able to produce maximum amount of output with minimum amount of inputs which is nothing but minimum efficient scale. However if the minimum efficient scale is small with respect overall size of the market than there will large number of firms in the market thus making it responsible for determination of number of firms that can be there in the industry