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3 August, 17:36

Why is average cost and short run marginal cost always u-shaped

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  1. 3 August, 17:45
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    The Marginal Cost curve is U shaped because at the beginning when a firm increases its output, average costs, as well as variable costs, start to increase at a diminishing rate. At this stage, due to economies of scale, Marginal Cost falls till it becomes minimum. Then as output rises, the marginal cost increases.
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