Responses unit 6

Benjamin

4/30/2014 12:23:01 PM

If a business was to experience a sudden increase in fixed costs it would impact a lot of areas.  The areas it would impact would be average fixed cost, average variable cost, average total cost, and marginal costs.  Average fixed cost, and average total costs would increase because the fixed costs directly effects both of those averages.  The average variable cost would not be effected by that because the average variable cost goes up or down depending on the variable cost itself, not the fixed cost.  And the marginal cost would go down because the fixed cost would have less of a financial difference between the fixed cost and total cost of the product.  

Ben

Disc #6

Victor

4/30/2014 11:51:55 PM

Hello class, If a business experiences a sudden increase of its fixed costs the Average Fixed Cost will

also rise since the fixed cost has a direct effect on its average. On the other hand, the Average Variable Cost will remain the same. The fixed cost has no relation to what happens to the Average variable cost either directly nor indirectly. Since the Average

total cost deals with the overall production of units, the change in price will affect and in this case increase the ATC per item. The Marginal Cost only deals with the change in price for the manufacturer to produce one more item, the MC should not adjust

in the amount of price due to the increase of fixed. All the curves would reflect the new changes due to the price increase of the fixed price. Victor