The Following Table Gives the Average Cost of Production for Three

The following table gives the average cost of production for three different categories of firms producing the same product.

$$\begin{array} { | c | c | c | c | } \hline \begin{array} { c } \text { Type of } \\\text { firme }\end{array} & \begin{array} { c } \text { No. of } \\\text { firms }\end{array} & \begin{array} { c } \text { Awerane } \\\text { sostper } \\\text { unit }\end{array} & \begin{array} { c } \text { Equilibrium } \\\text { output }\end{array} \\\hline \hline \text { A } & 350 & \$ 3 & 10 \text { units } \\\text { B } & 400 & \$ 5 & 10 \text { units } \\\text { C } & 550 & \$ 10 & 10 \text { units } \\\hline\end{array}$$
-Refer to Table .Suppose the price level in the market is at $6 per unit and the quantity demanded is 3,500 units.However, an increase in the fuel costs drives up the variable cost incurred by both Type A and Type B firms by $2.50 per unit.Which of the following situations will arise?

A) Type A firms will be able to supply the 3,500 units demanded and will earn a profit.
B) Type A firms will leave the market until the price level increases to cover the variable cost.
C) Both Type A and Type B firms will reduce production until the price level increases to cover the variable cost.
D) Both Type A and Type B firms will increase production to lower the average variable cost.

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