Is the output level at which any economies of scale have been fully exploited and the LRAC curve is at the lowest point.
Below is an example of how a firm can achieve the MES. One important point to note is that the larger the level of output that needs to be produced to reach the MES the less contestable the market is. This is because it is extremely difficult for new entrants to produce at such a large scale at the embryonic stage of their development. Often if the MES is so far along the LRAC curve this means that the market is a natural monopoly.
