Minimum Efficient Scale

Minimum Efficient Scale
The smallest amount of production a company can achieve while still taking full advantage of economies of scale with regards to supplies and costs. In classical economics, the minimum efficient scale is defined as the lowest production point at which long-run total average costs (LRATC) are minimized.

The minimum efficient scale may be expressed as a range of production values, but its relationship to the total market size or demand will determine how many competitors can effectively operate in the market.

If the minimum efficient scale is relatively small compared to total market size (a good example would be computer software), many companies can exist in the same space. In other industries - such as telecom and basic materials - the minimum efficiency scale is quite large due to the high ratio of fixed costs to variable costs. In these types of industries, only a few major players tend to dominate the space.

Investment dictionary. . 2012.

Игры ⚽ Нужна курсовая?

Look at other dictionaries:

  • Minimum efficient scale — (MES) or efficient scale of production is a term used in industrial organization to denote the smallest output that a plant (or firm) can produce such that its long run average costs are minimized. Contents 1 Computing 2 Relationship to average… …   Wikipedia

  • Minimum Efficient Scale — (MES) is a term used in industrial organization to denote the smallest output that a plant (or firm) can produce such that its long run average costs are minimized. This concept is useful in determining the likely market structure of a market.… …   Wikipedia

  • Scale-invariant feature transform — Feature detection Output of a typical corner detection algorithm …   Wikipedia

  • Minimum spanning tree — The minimum spanning tree of a planar graph. Each edge is labeled with its weight, which here is roughly proportional to its length. Given a connected, undirected graph, a spanning tree of that graph is a subgraph that is a tree and connects all… …   Wikipedia

  • Минимальный экономически эффективный масштаб производства — MINIMUM EFFICIENT SCALE Размер предприятия, при котором достигаются наименьшие средние долгосрочные издержки роизводства. На графике это точка на кривой средних издержек фирмы в долгосрочном периоде. Кривая средних долгосрочных издержек обычно… …   Словарь-справочник по экономике

  • МАСШТАБ НАИМЕНЬШЕЙ ЭФФЕКТИВНОСТИ — MINIMUM EFFICIENT SCALEУровень производства, при к ром в долгосрочном плане средняя себестоимость продукции является наименьшей. Иными словами, даже при дополнительных вложениях капитала фирма не сможет производить товар по более низкой средней… …   Энциклопедия банковского дела и финансов

  • Cost curve — In economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, productively efficient firms use these curves to find the optimal point of production (minimising cost), and… …   Wikipedia

  • Monopoly — This article is about the economic term. For the board game, see Monopoly (game). For other uses, see Monopoly (disambiguation). Competition law Basic concepts …   Wikipedia

  • Average cost — In economics, average cost is equal to total cost divided by the number of goods produced (the output quantity, Q). It is also equal to the sum of average variable costs (total variable costs divided by Q) plus average fixed costs (total fixed… …   Wikipedia

  • Monopolistic competition — Short run equilibrium of the firm under monopolistic competition. The firm maximizes its profits and produces a quantity where the firm s marginal revenue (MR) is equal to its marginal cost (MC). The firm is able to collect a price based on the… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”