Posted: November 6th, 2022
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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 increase have on the following:the firm’s AFC (average fixed cost);
the firm’s AVC (average variable cost);
the firm’s ATC (average total cost); and,
the firm’s MC (marginal cost)?
What changes, if any, are there likely to be in these same cost CURVES?
Identify a fixed cost, other than rent or a mortgage payment, and three different variable costs in your home.
How would a change in a fixed cost in your home directly affect your variable costs?
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