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BU/224 BU224 BU 224 UNIT 7 DISCUSSION

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BU 224 UNIT 7 DISCUSSION Unit 7: Unit 7: Fixed Costs and Variable Costs – 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); b. the firm’s AVC (average variable cost); c. the firm’s ATC (average total cost); and, d. 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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