The figure shows the average product curve and its relationship with the marginal product curve. When marginal product exceeds average product increases. When marginal product is below average product, average product decreases. When marginal product equals average product, average product is at its maximum. To produce more output in the short run, the firm must employ more labour, which means that it must increase its cost. Three cost concepts and three types of costs curves are: total cost, marginal cost, average cost. A firm"s total cost (tc) is the costs of all resources used. Total fixed cost (tfc) is the cost of the firm"s fixed inputs. Total variable cost (tvc) is the cost of the firm"s variable inputs. Total cost equals total fixed cost plus total variable cost: The figure shows a firm"s total cost curves. Total fixed cost is the same at each output level. Total variable cost increases as output increases.