Minimum efficient scale will decrease if fixed costs increas

Minimum efficient scale will decrease if:

fixed costs increase.

transportation costs increase in relation to production costs.

transportation costs decrease in relation to production costs.

variable costs decrease.

Solution

Option (D).

Minimum efficient scale is when a firm operates at its lowest point of average total cost. If variable costs decrease, average variable cost decreases and average total cost also decreases, so minimum efficient scale decreases.