Ab 224 unit 7: fixed costs and variable costs – discussion

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Topic 1 Discussion topic: Increase in Fixed Costs

Suppose a business experiences a sudden increase in its fixed costs. For example, suppose property taxes increase dramatically. What impact, if any, will this have on the following:
1. the firm’s AFC (average fixed cost);
2. the firm’s AVC (average variable cost);
3. the firm’s ATC (average total cost); and,
4. the firm’s MC (marginal cost)?
What changes, if any, is there likely to be in these same cost CURVES?

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