The lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum defines
A) maximum efficient scale.
B) minimum efficient scale.
C) allowable efficient scale.
D) short-run efficient scale.

Question

Quizplus · Accepted Answer

The lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum is known as the minimum efficient scale. This represents the point at which a firm achieves optimal efficiency, utilizing all available resources to produce output at the lowest possible cost. Maximum efficient scale refers to the point at which a firm fully utilizes its capacity, while allowable efficient scale refers to the range of output levels at which a firm can operate efficiently. Short-run efficient scale does not take into account all variable costs and is therefore not a relevant concept when considering the long-run average costs of a firm.

The Lowest Rate of Output Per Unit of Time at Which