Question 1
The 'minimum efficient scale' of operations refers to a scale of plant at which
◦ economies of scale are just exhausted.
◦ diseconomies of scale are at the lowest point.
◦ managerial diseconomies are just offset by technical economies of scale.
◦ none of the above occurs.
Question 2
Minimum Efficient Scale is the point where
◦ natural monopoly occurs.
◦
LRAC is first minimised.
◦
LRAC falls the most rapidly.
◦
LRAC rises least rapidly.