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:
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, is there likely to be in these same cost CURVES?