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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?
A few points to note Our total cost (TC) = Fixed Cost (FC) + variable cost (VC) If Fixed Costs (FC) increases, the change... View the full answer