Question
In 2021, Apple was considering developing a car. If it went forward with the plan, it intended to contract with another firm to build the
In 2021, Apple was considering developing a car. If it went forward with the plan, it intended to contract with another firm to build the factory in which Apple's cars would be manufactured. A news article quoted an industry analyst as saying that, "In order to have a viable assembly plant, you need 100,000 vehicles annually, with more volume to come." Otherwise the plant would not reach minimum efficient scale.Source: Stephen Nellis, Norihiko Shirouzu, and Paul Lienert, "Apple Targets Car Production by 2024 and Eyes 'Next Level' Battery Technology," reuters.com, December 21, 2020.What is minimum efficient scale?Minimum efficient scale is
A.
the level of output at which all diseconomies of scale are exhausted.
B.
the level of output at which
alleconomiesofscaleareexhausted.
C.
the level of output at which the marginal cost of production reaches a minimum.
D.
the level of output at which a firm begins to experience economies of scale.
E.
the level of output at which the long-run average cost of production begins to decline.
What is likely to happen in the long run to Apple's car business if the plant manufacturing its cars does not reach minimum efficient scale?A firm that does not reach its minimum efficient scale
A.
will lose money if it remains in business.
B.
will be experiencing constant returns to scale.
C.
will earn positive profits if it remains in business.
D.
will become a natural monopoly.
E.
both a and b.
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