The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3

-The term minimum efficient scale refers to:
A)the output corresponding to the minimum point of the short-run average-total-cost curve.
B)the total of all efficient points along the long-run average-cost curve.
C)the output corresponding to the highest point of the short-run average-total-cost curve.
D)the minimum point of the long-run average-cost curve, or the output level at which the cost per unit of output is the lowest.
E)the maximum point of the long-run average-cost curve, or the output level at which the cost per unit of output is the highest.

Question

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
 
-The term minimum efficient scale refers to:
A)the output corresponding to the minimum point of the short-run average-total-cost curve. 
B)the total of all efficient points along the long-run average-cost curve. 
C)the output corresponding to the highest point of the short-run average-total-cost curve. 
D)the minimum point of the long-run average-cost curve, or the output level at which the cost per unit of output is the lowest. 
E)the maximum point of the long-run average-cost curve, or the output level at which the cost per unit of output is the highest.

Quizplus · Accepted Answer

The term minimum efficient scale refers to the minimum point of the long-run average-cost curve or the output level at which the cost per unit of output is the lowest. This is because in the long run, the firm can vary all inputs and choose the most efficient combination to produce a given level of output. The minimum efficient scale is the output level where the firm has achieved economies of scale, meaning that it is producing at the lowest possible cost per unit. Therefore, option D is the correct choice.

The Figure Given Below Shows Three Short Run Average Total