Diagrams 1 and 2 display two distinct long-run average cost curves (LRAC). What situations are represented by the two diagrams?
- Adiagram 1: falling returns to scale; diagram 2: average cost is greater than marginal cost
- Bdiagram 1: falling returns to scale; diagram 2: rising returns to scale
- Cdiagram 1: unit cost falls as output increases; diagram 2: falling average fixed costs
- Ddiagram 1: unit cost falls as output increases; diagram 2: unit cost rises as output increases