I have struggled to understand the one thats highlighted and how the curves are derived, please explain it step by step, thanks!

TC/ . R1 VC R2 E/hr FC Q Q2 Q3 Q1 MC E/unit of output ATC AVC AFC Q Q3 Q1 Q2 FIGURE 11.5 The Marginal, Average Total, Average Variable and Average Fixed Cost Curves Fixed costs do not depend on Q and so the AFC curve decreases with Q. The AVC curve decreases with Q when there are increasingreturns to the variable factor and increases with Q when there are diminis% realms to the variable factor. Geometrically, average variable cost at any level of output Q, which is equal to VC/Q, may be interpreted as the slope of a ray to the variable cost curve at Q. Notice in the top panel in EignLLlLS that the slope of a ray to the VC curve declines with output up to the output level Q2; thereafter it begins to increase. The corresponding average variable cost curve, shown in the bottom panel in EiguLLlLS, therefore reaches its minimum value at Q2, the output level at which the ray R2 is tangent to the variable cost curve. Beyond that point, the AVC curve increases with output. The graph of the ATC curve is generated in an analogous fashion. For any level of output, ATC is the slope of the ray to the total cost curve at that output level. For the total cost curve in the top panel in W, the corresponding ATC curve is plotted in the bottom panel of the diagram. Note that the minimum point on ATC in the bottom panel occurs at Q3, the output level for which the ray R1 is tangent to the TC curve in the top panel. Recall that because TC = PC + VC, it follows that ATC = AFC + AVC (simply divide both sides of the former equation by output). This means that the vertical distance between the ATC and AVC curves at any level of output will always be the corresponding level of AFC. Thus the vertical distance between ATC and AVC approaches infinity as output declines toward zero, and shrinks toward zero as output grows toward innity. Note also in W that the minimum point on the AVC curve occurs for a smaller unit of output than does the minimum point on the ATC curve. Because AFC declines continuously, ATC continues falling even after AVC has begun to turn upward