If the long-run average cost curve is U-shaped,the optimal scale of production from society's viewpoint is
A) the minimum efficient scale.
B) where maximum economic profit is earned by producers.
C) where firm profit is large enough to finance research and development.
D) one that guarantees economic profit.

Question

Quizplus · Accepted Answer

When the long-run average cost curve is U-shaped, the optimal scale of production from society's viewpoint is the minimum efficient scale. This is because at this point, the firm is able to produce at the lowest possible cost, which benefits both the producers and consumers. It is also the point at which there are no market failures or inefficiencies, and resources are being used to their fullest potential. Therefore, this choice is in line with society's goal of maximizing overall welfare.

If the Long-Run Average Cost Curve Is U-Shaped,the Optimal Scale