Glossary · Micro · Production and costs

Minimum efficient scale (MES)

The smallest output at which a firm reaches the bottom of its long-run average cost curve. If MES is large compared with the whole market, only a few firms can fit, which is one route to oligopoly or natural monopoly.

Also called: MES

Taught in: Economies of Scale

Related terms

Long-run average cost (LRAC)Economies and diseconomies of scaleNatural monopoly

More from production and costs

Average fixed cost (AFC)Average product of labor (APL)Average total cost (ATC)Average variable cost (AVC)Cobb-Douglas production functionFixed cost (FC)Isoquant

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