The correct answer is: B. The marginal product is decreasing.
Marginal product is the additional output that a firm produces when it adds one more unit of input. In the short run, some inputs are fixed, so the firm can only increase output by adding more variable inputs. As the firm adds more variable inputs, the marginal product of each input will eventually decrease. This is because the law of diminishing returns states that as more of an input is added, the marginal product of that input will eventually decrease.
When the marginal product of a variable input is decreasing, the firm’s short-run marginal-cost curve will be increasing. This is because the firm must pay more for each additional unit of output, since the marginal product of each unit is decreasing.
The other options are incorrect because:
- A. The marginal product is increasing. This would cause the firm’s short-run marginal-cost curve to be decreasing.
- C. The total fixed cost is increasing. This would not affect the firm’s short-run marginal-cost curve, since the total fixed cost is not a variable cost.
- D. The average fixed cost is increasing. This would cause the firm’s short-run average-cost curve to be increasing, but it would not affect the firm’s short-run marginal-cost curve.