The Figure below shows the short-run total cost curves SRATC at different scales and the long-run average total cost curve LRATC of a firm.

1. Which of the SRATC curves corresponds to the minimum efficiency scale?
2. What is the optimal scale of producing Q₁?
3. Is Q₁ the optimal output for the scale SRATC₁?
4. If not, what is the optimal output for scale SRATC₁?
5. If conditions are such that the firm must produce Q_A, which scale should it use to maximise profits?

LRATC SRATC, Average Total Cost SRATC3 SRATC CH SRATC2 - Q1 QA QM Quantity