Answer is b. why the firm's long run total average cost curve is U shaped.

• The U shape of the long run average cost curve can be explained in terms of economies and diseconomies of large scale production
• As the size of plant increases, the long run average cost curve (LAC) typically declines over some range of output. This is because there is greater potential for specialization of productive factors. For example, ability to use more sophisticated capital equipment, managerial specialization, ability to take advantage of lower costs by purchasing inputs in large quantities, etc. These cost advantages due to increase in scale of production is known as economies of scale.
• But after some time, further expansion in output may give rise to diseconomies , pushing up the per unit cost. For example, managerial inefficiencies, lack of initiative in workers due to extreme division of labor etc.As a result the LAC starts rising.
• The LAC becomes lowest at the output at which the forces of increasing returns to scale are just balanced by the forces for decreasing returns to scale
• This explains the U shape of the long run average cost curve.