(a) Why is the short run Marginal Cost curve U-shaped ?

(b) Explain the relation between Average Cost (AC) curve and Marginal Cost (MC) curve using the diagram.

Marginal cost is an additional cost that is incurred to the total cost for the production of additional units.

MC=delta (TC)/Delta (Output)

It is U shaped because as the output increases the MC decreases initially and increases afterward.

(b) Average cost is derived by dividing the total cost by the number of units produced while Marginal cost is the cost of producing one additional unit of output.

AC=Total cost/total Units

MC= cost of one additional unit output

Therefore when average cost increases meaning the output units increases and marginal cost becomes less than the average cost.