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Costs and economies of scale

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Question 6

A specialized semiconductor foundry is analyzing its long-term cost structures to determine the optimal size of a new manufacturing facility. The diagram below illustrates the firm's Long-Run Average Cost (LRACLRACLRAC) curve.

Semiconductor Foundry LRAC Curve

What does point Z Z\,Z represent on this curve?

Economies of scale

Diseconomies of scale

Minimum efficient scale

Constant returns to scale

Costs and economies of scale Questions

  1. A Level
  2. /Economics
  3. /Costs and economies of scale