External Economies Shift Industry ATC Curves

Steps:

• Recognize ATC1 to ATC2 as a downward shift in average total cost, indicating falling unit costs.
• Distinguish internal economies (firm-specific) from external (industry-wide).
• Link external factors to a uniform shift across firms' ATC curves.
• Match to option B as the only industry-level cause.

Why B is correct:

• External economies of scale reduce costs for all firms as industry output grows (e.g., via shared infrastructure), shifting the entire ATC curve downward per the long-run average cost law.

Why the others are wrong:

• A: Difficulties in controlling cause diseconomies of scale, raising ATC.
• C: Managerial economies are internal, lowering one firm's ATC without industry shift.
• D: Technical economies are internal, improving one firm's production efficiency only.

Final answer: B