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20 February, 16:23

When a firm is at its minimum efficient scale of operation, it produces the

a. maximum rate of output at which long-run average cost is minimized.

b. minimum rate of output at which long-run average cost is minimized.

c. maximum rate of output consistent with lowest long-run marginal cost.

d. minimum rate of output consistent with lowest long-run marginal cost?

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  1. 20 February, 16:51
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    The relation between cost per unit of output and the level of output is captured in the average total cost curve.

    When a firm is at its minimum efficient scale of operation, it produces the minimum rate of output at which long-run average cost is minimized. With economies of scale, costs may fall over some ranges of output and rise over other. Correct answer: B
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