If Handel’s Ice Cream benefits from economies of scale up to a certain level of output but faces diseconomies of scale afterward, what shape would its long-run average cost curve most likely take?

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Continuously declining as output increasesShaped like a U, first decreasing then increasingRemaining constant regardless of outputContinuously rising as production expandsNone of the above

Explanation

When a firm experiences economies of scale initially, its average costs decrease as production grows. However, after reaching an optimal scale, diseconomies of scale cause average costs to rise. This results in a long-run average cost curve that is U-shaped, first falling and then rising.