An electronic-parts manufacturer with U-shaped short-run cost curves is producing 10 000 units per month and has short-run costs as follows: ATC = $6.50 AVC = $4.50 AFC = $2.00 Mc = $6.90 a) At this level of output, has the firm started experiencing diminishing marginal and average returns? How do you know? b) At this level of output, is the firm operating below, at, or above its capacity? How do you know?