long-run cost diagram for a firm. If the firm produces output Q2 at an average cost of ATC3, then the firm is Multiple Choice producing the profit-maximizing output but is failing to minimize production costs. incurring X-inefficiency but is realizing all existing economies of scale. incurring X-inefficiency and is failing to realize all existing economies of scale. producing that output with the most efficient combination of inputs and is realizing all existing economies of scale