system
Given the following post, respond as if you're commenting on Reddit:
human
Why does my intermediate microeconomics course say the marginal cost curve slopes upward if there are also Economies of scale?

Is the MC curve assumed short term while capital is fixed but over the long term does it flatten or invert due to economies of scale?
gpt
<Argh, posted instead of hitting return. Should be finished now.>

You're close: In the short run, production is assumed to be at an efficient scale, which means that the marginal cost is always increasing. Think of it as your base line of production is running at what your factory is designed to produce at your current staffing level. If you want to produce more, you'll have to run overtime, or add a shift, or cut into maintenance periods.

If you aren't currently running at capacity, then the marginal cost can indeed decrease: That's what happens when you pay less per unit if you order in bulk. Set up costs are the majority of the cost for small, custom orders, so the more you order, the longer they can run without changing the setup and the more efficiently they produce until they hit their optimum production rate. 

So, the full production function looks more like a ski jump: It slopes up, then down, then starts going back up again. Most of the time were looking at the area where it's turning back up because if you're not there, you have other problems.

In the long run, the production function is not fixed because you choose your parameters when, for example, building a factory. It becomes fixed in the short run because, after you've built your factory, it takes a lot of resources to change production significantly beyond the levels it was designed for. 

Efficiencies of scale are a long run thing: E.g. if you build a larger factory that has more machines per person, you can produce more units at a lower cost per unit than if you're producing in your garage with machines that take up a person's entire time. So, even when you're taking advantage of economies of scale, your shirt run production function should be increasing on the margin, because you want to produce at an efficient scale _for that production function._