Question

Why is short run average cost curve u shapped
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Answer 1

⎝⎝⫸⫷ANSWER⫸⫷⎠⎠

Short run cost curves tend to be U shaped because of diminishing returns. In the short run, capital is fixed. After a certain point, increasing extra workers leads to declining productivity. Therefore, as you employ more workers the marginal cost increases.

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Answer 2

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Short run cost curves tend to be U shaped because of diminishing returns. In the short run, capital is fixed. After a certain point, increasing extra workers leads to declining productivity. Therefore, as you employ more workers the marginal cost increases.