Minimum Efficient Scale of Production
A firm is operating at the minimum efficient scale point in a perfectly competitive market. Which of the following statements is _most likely_ to be true?
Incorrect.
A firm operating at the minimum efficient scale point in a perfectly competitive market will earn zero economic profit.
That’s correct.
The minimum efficient scale point is the lowest point on the firm’s long-run average cost curve, so at this point, the firm has the lowest possible average cost.
Incorrect.
If a firm is operating at the minimum efficient scale point, then increasing production will result in diseconomies of scale, not economies of scale.
The firm is earning a positive economic profit
The firm has the lowest possible average cost
The firm will experience economies of scale by increasing production
