Assume That the Minimum Efficient Scale for a Typical Firm

Multiple Choice

Assume that the minimum efficient scale for a typical firm in an industry is 2 million units. The estimated output for the whole industry is 6 million units. Therefore, one can conclude that:

A) the industry is a natural monopoly.
B) the output produced in the industry is less than the perfectly competitive output.
C) the industry experiences increasing returns to scale.
D) the industry is likely to support 3 firms, each producing at minimum efficient scale.
E) the price in the industry is higher than the perfectly competitive price.