and in the long run the firm should price fails below the minimum point on the AVC curve, in the short run the firm should O produce where MC - MR: exit the Industry produce where MC = MR, expand shut down: expand shut down; exit the industry QUESTION 29 labor is a variable input in production, the law of diminishing marginal returns implies that in the short run total product is negative O labor's marginal product decreases after a certain point. labor's marginal product is constant total product is negative after a certain point has been reached