Answer: Minimum efficient scale is 8 units.
Explanation:
Given that,
Cost function: C(q) = 64 + [tex]q^{2}[/tex]
Marginal cost function: MC = 2q
Average cost: AC = [tex]\frac{C(q)}{q}[/tex]
= [tex]\frac{64 + q^{2}}{q}[/tex]
= [tex]\frac{64}{q} + q[/tex]
The minimum efficient scale is at a point where MC = AC
2q = [tex]\frac{64}{q} + q[/tex]
[tex]q^{2} = 64\\q = \sqrt{64} \\q = 8[/tex]
Therefore, minimum efficient scale is 8 units.
