An electricity-generating company confronts the following long-run average total costs associated with alternative plant sizes. It is currently operating at plant size G.
Plant Size Average Total Cost ($)
A (smallest) ..................................... 2,000
B ................................................. 1,800
C ................................................. 1,600
D ................................................. 1,550
E ................................................. 1,500
F ................................................. 1,500
G (largest) ..................................... 1,500
a. What is this firm's minimum efficient scale?
b. If damage caused by a powerful hurricane generates a reduction in the firm's plant size from its current size to B, would there be a leftward or rightward movement along the firm's long-run average total cost curve?