Why is the short-run marginal cost curve ‘U-shaped’?

OR

Distinguish between ‘Supply’ and ‘Quantity Supplied’.

● The short-run marginal cost curve is u shaped due to the operation of the returns to factor input.

● At the initial stages, units of the variable factor are employed along with a unit of the fixed factor which yields increasing returns.

● This will reduce the marginal cost and push the curve down.

● The addition of more variable factors may lead to diminishing returns.

● This will increase the marginal cost after reaching its minimum level.

● The marginal cost curve falls to its minimum level and then Rises.

● This is the reason that the short-run marginal curve is u shaped.

OR

The supply refers to the different quantity of A commodity that a producer is willing to sell at different prices.

The quantity supplied refers to the quantity of the commodity that a seller is willing to sell at a given price.