Why are AVC and ATC curves U-shaped?

Posted on

The shapes of AVC and ATC curves are influenced by the shape of MC curve in the short-run. The shape of MC curve is U-shaped because of the operation of the law of variable proportions. Consequently, AVC and ATC curves are also U-shaped.

Initially, in the stage of increasing returns when marginal cost curve falls, the AVC and ATC curves also fall. After a certain level of output in the stage of diminishing returns when marginal cost curve rises, the AVC and ATC curves also rise.

Thus, because of the operation of law of variable proportions as output rises, the AVC and ATC curves first fall, reach their minimum and the begin to rise.

So, in the short-run, MC curve, AVC curve and ATC curve all are U-shaped.

Related posts:

  1. Describe the Character of Sergei
  2. Examine the Role of Industrial Working Class in the Civil Disobedience Movement
  3. Describe the Actions Taken by the British Administration Against the Nationalists Who Opposed the Rowlatt Act.
  4. Who Was Alluri Sitaram Raju? Explain His Role in Inspiring the Rebels With Gandhiji’s Ideas

Leave a Reply

Your email address will not be published. Required fields are marked *