If a firm has to increase output suddenly to meet an increase in demand,its average total cost will increase in the short run until it has time to add physical capital.

The firm will have to increase its production with its existing physical capital, which may lead to higher costs such as overtime wages, maintenance costs, and increased energy consumption. These short-run costs will cause the average total cost to increase until the firm has time to add more physical capital and achieve economies of scale in the long run.