Sia
Question
Microeconomics
Posted 7 months ago
With which of the following is a high minimum efficient scale associated?
Choose 1 answer:
A) absence of barriers to entry
(B) very high fixed costs
(C) very high and rapidly increasing marginal costs
(D) high average variable costs
(E) strongly increasing short-run average costs
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Answer from Sia
Posted 7 months ago
Solution
a
High Minimum Efficient Scale: A high minimum efficient scale (MES) is associated with very high fixed costs
Answer
(B) very high fixed costs
Key Concept
Minimum Efficient Scale (MES)
Explanation
The minimum efficient scale is the lowest level of output at which a firm can minimize long-run average costs. High MES is typically associated with very high fixed costs because significant investment in capital or technology is required to achieve economies of scale.
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