The minimum efficient scale is
A)the level of output where diminishing returns have not set in yet.
B)the plant size that yields the most profit.
C)the level of operation where long-run average costs are lowest.
D)the smallest output level where the firm finally reaches productive efficiency.

Question

Quizplus · Accepted Answer

The minimum efficient scale is the level of operation where long-run average costs are lowest. This implies that the plant size at this point would allow the firm to produce at the least possible cost per unit of output, hence increasing their profitability. Options A, B, and D are incorrect because they do not take into account the cost implications of the level of operation.

The Minimum Efficient Scale Is