Marginal cost and average total cost curves in the short run are similar in that they are U-shaped.

Question

Quizplus · Accepted Answer

In the short run, both the marginal cost and average total cost curves are typically U-shaped. This is because initially, as output increases, there are economies of scale which result in decreasing average costs. However, after a certain point, there are diseconomies of scale which lead to increasing marginal costs and average costs. Hence, both curves have a U-shape in the short run.

Marginal Cost and Average Total Cost Curves in the Short