Topic 1 Discussion topic: Increase in Fixed Costs 1

Topic 1 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-the firm’s AVC (average variable cost); C-the firm’s ATC (average total cost); and, D-the firm’s MC (marginal cost)?

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

In addition to addressing the two listed questions, identify something in your home that could affect your fixed costs, whether it increases or decreases them. Then, I’d like you to list three variable costs in your budget.

Don’t forget to do the second part of the original question, which addresses the cost curves. Some students forget to do this. And, as usual, don’t forget to cite material and list a reference.

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