The Short-Run Average Total Cost (ATC) Curve of a Firm

Multiple Choice

The short-run average total cost (ATC) curve of a firm will tend to be U-shaped because

A) larger firms always have lower per-unit costs than smaller firms.
B) at low levels of output, AFC will be high, while at high levels of output, MC will be high as the result of diminishing returns.
C) diminishing returns will be present when output is small, and high AFC will push per-unit cost to high levels when output is large.
D) diseconomies of scale will be present at both small and large output rates.