In the long run, a firm faces a U-shaped Long-run Average Cost (LAC) curve. If the firm expands its production scale beyond the minimum efficient scale, the unit cost begins to rise due to management inefficiency and coordination issues. This rise in cost represents:

Consider the following statements regarding the theories of cost in microeconomics: Statement 1: Traditional neoclassical cost theory derives smooth, U-shaped short-run average cost curves directly from the operation of the law of variable proportions. Statement 2: Modern cost theory argues that the long-run average cost (LAC) curve is U-shaped, indicating that diseconomies of scale are pervasive in manufacturing. Which of the statements given above is/are correct?

In the long-run theory of cost, the optimum scale of production is achieved where: