The LRAC Curve

In our examples, the LRAC is (more or less roughly) u-shaped, like this:

Figure 5

The idea is that:

for small outputs, indivisibilities predominate, and so long run average cost declines with increasing output
for intermediate outputs, operations can be expanded roughly proportionately, while tendencies to increasing and decreasing costs -- if any -- offset one another.
for large outputs, the problems of management predominate, and so long run average cost increases with increasing output.

That's reasonable -- but we should recall that it is pretty much a guess, and may or may not apply in a particular case!