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CHAIRMAN OF THE BOARD OF GOVERNORS: The head of the Federal Reserve Board of Governors and the Federal Reserve System. This is the guy in charge of monetary policy and is considered to be one of the two or three most powerful people in terms of the national and global economy. The Chairman is one of the seven members of the Board and serves as Chairman for a five-year term. The Fed Chairman also serves as Chairman of the powerful Federal Open Market Committee, the Fed Committee that sets the course of monetary policy.
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                           MINIMUM EFFICIENT SCALE: The quantity of production that places a firm at the lowest point on its long-run average cost curve. The minimum efficient scale achieves production of a good at the lowest possible opportunity cost. In other words, it is not possible to produced a good at any lower cost than at the minimum efficient scale. At this quantity the production involves foregoing the least amount of other goods. While minimum efficient scale is often specified in terms of "the quantity of production," it need not be a single quantity. It could be a range of output. The reason is that long-run average cost is subject to two influences, economies of scale (and increasing returns to scale) for small production levels and diseconomies of scale (and decreasing returns to scale) for larger production levels.The minimum efficient scale is the production quantity or range of quantities in which these two influences balance out. Or, another way of stating this, the minimum efficient scale is the production quantity or range of quantities in which the economies of scale have been exhausted, but the diseconomies of scale have not yet surfaced. This could be a single quantity, a turning point on the long-run average cost curve, or it could be a range of output. Long-Run Average Cost Curve |  | The exhibit to the right presents the long-run average cost curve for the production of Wacky Willy Stuffed Amigos (those cute and cuddly armadillos, tarantulas, and scorpions). The negatively-sloped range for relatively small quantities of output is the result of economies of scale. Over this range, workers and machinery become increasingly specialized, volume discounts are given on electricity prices, auxiliary activities begin springing up around the Wacky Willy factory, and markets are emerging for some of the bi-products.As the scale of production increases, these economies of scale are exhausted and diseconomies take hold. This is reflected in the positively-sloped portion of the long-run average cost curve. Diseconomies of scale result because the factory is so big, with so many workers and levels of management, that it is increasingly difficult to manage. Moreover, because The Wacky Willy Company is the primary employer in Shady Valley, labor prices rise as Wacky Willy employment increases. The minimum point on the long-run average cost curve occurs where economies of scale give way to diseconomies, and a production quantity of 300. This is the minimum efficient scale for the production of Wacky Willy Stuffed Amigos. As far as the opportunity cost of foregone production is concerned, Wacky Willy cannot produced Stuffed Amigos at a lower per unit cost than at this minimum efficient scale.
 Recommended Citation:MINIMUM EFFICIENT SCALE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: June 14, 2025]. Check Out These Related Terms... | | | | | | | Or For A Little Background... | | | | | | | | | And For Further Study... | | | | | | | |
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PINK FADFLY [What's This?]
Today, you are likely to spend a great deal of time searching for rummage sales wanting to buy either an AC adapter that won't fry your computer or a case for your designer sunglasses. Be on the lookout for telephone calls from former employers. Your Complete Scope
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
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"We should never allow ourselves to be bullied by an either-or. There is often the possibility of something better than either of those two alternatives. " -- Mary Parker Follett, management coach
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RTA Reciprocal Trade Agreement
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