AC, means Average Cost, which is The Average of total Cost, now as per our knowledge we know that Total cost cuve is first concave than convex, this is because it first Increases in Diminishing Rate (Diminishing MC) and than increases at Increasing Rates (Increasing MC) ,(This is because of Law of variable Proportion) .
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The above explaination also helps to understand the shape of MC, which U(First Downward than Upward) Now, as this changes in shape of TC and MC also effects AC, to explain it i have an example :
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Note that AC = TC /Units produced, and TC increases at diminishing rate than at Increasing Rates, All the Data are Imaginary but based on Law of Variable Proportion.
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If at 1 unit TC is = 10 than AC is = 10.

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If at 2 unit TC is = 12 than AC is = 6.

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If at 3 unit TC is = 13 than AC is = 4.33..If at 4 unit TC is = 18 than AC is = 4.5.

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If at 5 unit TC is = 30 than AC is = 6.

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If at 6 unit TC is = 60 than AC is = 10.

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Now, if you want to be more clear about it just plot the above data in your graph, you will realize that AC is Forming U shape, because AC first Decreases than Increases.

.It is noticable that, AC at 1-3 units is deacresing, because at that stages TC is not increasing in enough but per Units production is Increasing which therefore Deacresing "Average " per unit.
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At units 4-6 AC is Increasing Beacuse there is TC increasing at Very High rate which is not only covering the difference between the Previous and Next AC unit (e. g. 4 to 5 ) but also it is higher.
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For more details/explaination you may ask me in Reply section.

It is because of the law of variable proportion.Basically,in the first phase(increasing returns) the cost which is incurred on the variable will be much lesser than the cost which is incurred in other two phases as the variable factors are lesser than compared to diminishing returns or negative returns.