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Business
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| Number of pages / Number of words: |
2 / 493 |
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If higher profits were achieved, entry by other producers would occur. If the firm produces below MES (e.g. at 50% capacity) the cost penalty is also shown in Figure 1. This is a result of the firm having to place a greater cost on each unit produced. With increasing numbers of units produced, the costs eventually reach the MES...
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This is a result of the firm having to place a greater cost on each unit produced. With increasing numbers of units produced, the costs eventually reach the MES. If units are produced above this level, additional costs are required (i.e. procurement of additional equipment).
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