7 Microeconomics

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);

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

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

a. the firm’s MC (marginal cost)?

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

ASSIGNMENT

Attached is the assignment