A firm is producing at minimum average total cost with its current plant.   1. Draw the firm's long-run average cost curve. Label it.
2. Draw a point on the LRAC curve at which the firm can lower its average total cost by increasing its plant.
3. Draw the firm's short-run average total cost curve that is consistent with the point you have drawn. Label it.

When the firm can lower its average total cost by increasing its plant, then it is operating at a point on its long-run average cost curve with .  

a. constant returns to scale
b. diseconomies of scale
c. economies of scale