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Suppose a firm with the usual U-shaped cost curves is producing a level of output such that its short-run costs are as follows: ATC = $0.37 per unit, AVC = $0.32 per unit, AFC = $0.05 per unit, MC = $0.43 per unit. Given these short-run costs, as the firm increases its output, which of the following statements is true?
A) Marginal product of the variable factor must be increasing.
B) Average product of the variable factor must be increasing.
C) Marginal product of the variable factor must be decreasing.
D) The point of diminishing average product of the variable factor has not yet been reached.
E) Marginal product of the variable factor is at its minimum point.
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