Unit 7 Discussion

• Topic: Increase in Fixed Costs

1. 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:

a. the firm's AFC (average fixed cost);

b.

c. the firm’s AVC (average variable cost);

d. the firm’s ATC (average total cost); and,

e. the firm’s MC (marginal cost)?

2. What changes, if any, is there likely to be in these same cost CURVES