why are long run cost curves u shaped
Long Run Cost Curves. The long run cost curves are u shaped for different reasons. It is due to economies of scale and diseconomies of scale. If a firm has high fixed costs, increasing output will lead to lower average costs. However, after a certain output, a firm may experience diseconomies of scale.iagram of Marginal Cost. Because the short run Marginal cost curve is sloped like this, mathematically the average cost curve will be U shaped. Initially average costs fall. But, when marginal cost is above the average cost, then average cost starts to rise.