Economies of coordination post-merger lower ATC

Steps:

• Observe the diagram: Movement from X to Y shows ATC curve shifting downward after merger, indicating cost reductions.
• Link to merger effects: Mergers combine firms, enabling internal efficiencies beyond simple scale.
• Identify relevant economy: Coordination between departments reduces duplication and improves operations.
• Match to options: C directly explains synergy from integrating departments.

Why C is correct:

• Economies of coordination arise in mergers by streamlining management across units, reducing bureaucratic overlaps and ATC as per internal economies of scale definition.

Why the others are wrong:

• A: Rising demand shifts demand curve, not ATC; mergers affect costs, not consumer behavior.
• B: Marketing economies stem from larger advertising scale, unrelated to departmental integration in mergers.
• D: Bulk buying yields purchasing economies from volume, but mergers primarily enable coordination, not just procurement.

Final answer: C