When the minimum efficient scale occurs at a high level of industry output
A) the firms in the industry will be producing in the diseconomies of scale portion of the curve.
B) there will only be a few firms in the industry.
C) the government will have to take over the production of the good since it will be unprofitable for firms.
D) there will be a lot of firms in this industry.

Question

Quizplus · Accepted Answer

When the minimum efficient scale occurs at a high level of industry output, it means that production on a large scale is necessary to keep costs low. This typically results in economies of scale, which allow larger firms to produce at a lower cost than smaller firms. As a result, there will only be a few firms in the industry since it is difficult for small firms to compete with larger, more efficient firms. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect as they do not accurately describe the situation when minimum efficient scale occurs at a high level of industry output.

When the Minimum Efficient Scale Occurs at a High Level