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Questions and Answers
What does the Minimum Efficient Scale (MES) represent?
What does the Minimum Efficient Scale (MES) represent?
- A measure of output (correct)
- A measure of profit
- A measure of cost
- A measure of market size
What happens to the number of firms in the market when the MES increases?
What happens to the number of firms in the market when the MES increases?
- The number of firms oscillates
- The number of firms decreases (correct)
- The number of firms remains constant
- The number of firms increases
Why do smaller businesses face a barrier to entry in a market with high MES?
Why do smaller businesses face a barrier to entry in a market with high MES?
- They lack the skilled labor to compete
- They lack the technology to compete
- They lack the market knowledge to compete
- They lack the finance to increase their scale of production (correct)
What happens to a firm's LRAC curve when it operates below its MES?
What happens to a firm's LRAC curve when it operates below its MES?
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What happens to a firm's output when it operates above its MES?
What happens to a firm's output when it operates above its MES?
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What is the MES in perfect competition?
What is the MES in perfect competition?
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What is the impact of MES on the degree of competition in the market?
What is the impact of MES on the degree of competition in the market?
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Why do industries like hairdressing have a low MES?
Why do industries like hairdressing have a low MES?
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What is the relationship between MES and market size?
What is the relationship between MES and market size?
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What is the LRAC curve at the MES?
What is the LRAC curve at the MES?
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