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Answer to Question #101730 in Microeconomics for million
Question #101730
Why are AVC and ATC curves U- shaped in the short run?
Expert's 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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#340153 on Dec 2023
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