The diagram illustrates a firm's short-run (SRAC) and long-run (LRAC) cost curves. Which statement is correct?
- AWhen each of the three SRAC curves is U-shaped it shows the existence of economies of scale.
- BWhen the LRAC curve is upward-sloping beyond output OQ it shows the existence of diseconomies of scale.
- CWhen the minimum point of SRAC2 is below that of SRAC1 it shows the existence of the law of variable proportions.
- DWhen the minimum point of SRAC2 is below that of SRAC3 it shows the existence of economies of scale.