Question

Why is the MC curve in the short run 'U' shaped?

Answer 1

MC curve is U shaped in the short run because of three stages of marginal production.......Hence MC is the reciprocal of MP and according to law of variable proportion MP suddenly rises then dimnishines and in last became negative and zero.....Due to this MC in starts became less means increase at diminishing rate due to increasing return to factor and then increase with increasing rate due to diminishing return to the factor........simply agar production jyada hai too cost kam..... production kam hai too cost jyada ......