A firm experiences a shift in its long-run average cost curve from LRAC1 LRAC_1\,LRAC1 to LRAC2 LRAC_2\,LRAC2 as shown in the diagram.
What is the most likely cause of this shift?
The installation of a more advanced, high-volume automated production line as the individual firm triples its own level of output.
An industry-wide shortage of key raw materials causing a sharp rise in the market price of essential inputs.
The emergence of a cluster of specialized component suppliers and training providers in the firm's region as the wider industry grows.
A reduction in administrative and supervisory staff as the firm scales down its operations to combat communication difficulties.
