microecon discussion 2

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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:
    1. the firm’s AFC (average fixed cost);
    2. the firm’s AVC (average variable cost);
    3. the firm’s ATC (average total cost); and,
    4. the firm’s MC (marginal cost)?
  2. What changes, if any, is there likely to be in these same cost CURVES?

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