Question

When a firm is operating at an efficient scale, a. average variable cost is minimized. b. average fixed cost is minimized. c. average total cost is minimized. d. marginal cost is minimized.

Answer 1

Answer:

C

Explanation:

The efficient scale is were firm try to operate because is the lowest scale or the lowest point of the long run average cost to achieve economies of scale. Economies of scale is when a firm operates at a point in which it is efficient (produces at the minimum cost) and the price of its good is competitive. The figure shows the minimum efficient scale point which is placed on the LRAC (Long-Run-Avergare-Cost). Before that point the firm is producing at a competitive price but not at the minimum cost. After that point it is producing at a competitive price but at a cost that is too low.