A. Following the fall in the price of its product, a firm will keep operating in the short run if price is higher than average variable cost.

B. A firm has fixed cost = $1,000 and variable cost = $5 per unit of product for quantity produced less than 500. Over this range of quantity produced (less than 500) the firm will experience rising average total cost as quantity produced increases.

C. The law of diminishing returns implies that beyond a certain point each additional unit of variable input produces lesser output.