### (i) U-shaped Average Cost Curve in the Short-run
The U-shaped Average Cost (AC) curve in the short run is primarily attributed to the concepts of **economies of scale** and **diseconomies of scale**.
- **Economies of Scale:** At low levels of output, a firm can spread its fixed costs over a larger number of units, which leads to a decreasing average cost. For example, if a factory incurs high fixed costs (like rent or machinery) and starts


