8. The firm's short-run average total cost curve wi11 tend to be U-shaped. When output is small (relative to plant size), average fixed cost (and therefore ATC) will be high.

However, as output expands, AFC (and ATC) wi11 fall. As the firm attempts to produce a larger and larger rate of output using its fixed plant size, diminishing returns will eventually set in and marginal cost will rise quite rapidly as plant capacity is approached.

Thus, the short-run ATC will also be high for large output levels because marginal costs are high.