A company over utilising its resources is incurring losses as it is producing on rising part of average cost curve - Economics - Production and Costs

Question

A company over utilising its resources is incurring losses as it
is producing on rising part of average cost curve The company needs
suggestions as to how can it reduce losses? Use diagram

Richa Gupta · Accepted Answer

The point where the company is
currently producing i e on the rising portion of AC curve,
it is incurring losses due to the over-utilisation of resources
Thus, in order to minimise the losses, it should use its resources
efficiently To put in different words, it should go for optimum
utilisation of resources and not their over-utilisation This
optimum utilisation of resources is indicated by the point where
AC curve is at its minimum In other words, the company
should reduce its production level at the lowest point of
AC curve in order to reduce its losses This is because
after this point the diminishing returns to factor sets in, which
in turn indicates a fall in the output level
<img alt="" src=
"https://s3mn%20mnimgs%20com/img/shared/discuss_editlive/703555/2013_07_26_13_02_53/5516472%20(1)%20png">
As shown in the figure, the company
is currently producing at Q2 level of
output where it is incurring losses due to diminishing returns and
over-utilisation of resources Thus, in order to reduce its losses,
it should reduce the output production to
Q1 level of output indicating the
minimum of AC along with optimum utilisation of
resources

A company over utilising its resources is incurring losses as it is producing on rising part of average cost curve. The company needs suggestions as to how can it reduce losses? Use diagram.