A firm's short-run fixed costs are the cost of capital because the firm is not able to vary its capital amount in the short run. The firm's short-run average cost function is U-shaped because of the marginal product of labor, which is the additional output produced by an additional unit of labor. Initially, the marginal product is increasing as labor increases, which means the product can be made faster and therefore cheaper. This causes the average cost to decrease. Because capital is fixed in the short run, however, the marginal product will eventually decrease because the amount of capital used in production needs to be spread out across more and more people. Because of this, the product takes longer to make and is, therefore, more expensive. This will cause the average cost curve to then increase as output increases.