Question

If there are 10 plants producing the total domestic consumption of a product and each plant is operating at minimum efficient scale, then each plant accounts for what percentage of domestic consumption?
A. 5 percent
B. 10 percent
C. 20 percent
D. 25 percent

Answer 1

Answer:

The correct answer is B. If there are 10 plants producing the total domestic consumption of a product and each plant is operating at minimum efficient scale, then each plant accounts for 10 percent of domestic consumption.

Explanation:

It is understood that the total consumption of a product is 100% of it. Therefore, as long as there are 10 plants that, producing at a minimum efficiency scale on an equal basis, cover this total consumption, the percentage of consumption that each plant produces will be 10%.

This is so because 100/10 = 10, provided that it is considered that the production is carried out equitably between each of the production plants.